If you haven’t locked in the low mortgage rates everybody’s talking about, don’t despair—it’s not too late. Fixed mortgage rates dropped again this week, putting them at their lowest level since May 2013—and analysts predict they’ll continue falling.
The 15-year fixed rate also hit a milestone this week, falling below 3% for the first time since May 2013.
“Mortgage rates fell for the third consecutive week as oil prices plummeted and long-term Treasury yields continued to drop despite a strong employment report,” said Frank Nothaft, vice president and chief economist at Freddie Mac. “The economy exceeded expectations by adding 252,000 jobs in December, which followed an upward revision of 50,000 jobs to the prior two months. The unemployment rate fell to 5.6 percent, which was the lowest since June 2008.”
The average interest rate on a 30-year fixed mortgage dipped to 3.66% from 3.73% last week, according to the latest survey from Freddie Mac.
A year ago at this time, it trended at 4.41%.
The average rate on a 15-year fixed mortgage also registered a drop, to 2.98% from 3.05% last week. A year ago, it averaged 3.10%, according to Freddie Mac.
Averages for the two most popular, hybrid adjustable-rate mortgages also fell. The five-year ARM dropped from 2.98% to 2.90%, week-over-week. The one-year ARM trended down slightly, to 2.37% from 2.39% a week ago.
With interest rates falling, mortgage applications nearly doubled in the week ending Jan. 9, compared with the week before, according to the Mortgage Bankers Association.
Those gains were driven mostly by homeowners looking to refinance, the trade group said.
Refinancing could be bolstered further by an Obama administration decision last week to cut the premiums charged by the Federal Housing Administration on its loans.
The U.S. Department of Housing and Urban Development estimates that 100,000 to 200,000 borrowers could refinance loans guaranteed by the program this year.
The FHA estimates that an additional 250,000 first-time buyers will enter the market after the premium reductions.
So, what if you haven’t taken advantage of these historically low rates? In the short term, many analysts say there’s still time to cash in.
In the latest Mortgage Rate Trend Index by Bankrate.com, 64% of the panelists polled think rates will continue to fall, while 7% say rates will increase.
“If you took out a mortgage in the last few years, you certainly want to pull out your mortgage statement and see if you can improve your situation,” said Jim Sahnger, mortgage planner with Schaffer Mortgage in Palm Beach Gardens, FL. “If you took out an FHA mortgage in the last few years, even last year, pick up the phone and call a lender.”
It’s time to move on. You’ve decided to sell your home and embark on a new adventure.
Unfortunately, potential buyers don’t care about how long you obsessed over choosing the perfect bathroom tiles or the number of carpenters you interviewed to make the perfect built-in bookcase. To the buyer, those items may not matter to the value of the home, even if you think they should.
When it’s time to sell, you have to price your home right, using tangible factors. Here are six rules to remember:
1. Price is king
Your asking price determines how long the home will sit on the market. Pricing the home too high may reduce the number of interested buyers, which can cause your home to sit on the market too long. If your house is on the market too long, it may create the perception that there’s something wrong with it. It can also lead a buyer to think that you’re desperate for an offer. You want to avoid these outcomes and not overvalue your home.
On the flip side, pricing the home too low may create some skepticism and raise unwanted questions about the home’s true value. This will hit you in the bank account if multiple offers don’t drive the price up to its true market value.
2. Use comparable sales
The simplest way to figure out the right price for your home is to compare similar homes that have sold in your neighborhood. Instead of skulking in the shadows and casing the neighbor’s house, use realtor.com
to check out nearby stats.
Compare your house with those with the same number of bedrooms, bathrooms, and square footage. If you find comparable homes with similar floor plans and outdoor space, all the better. See how many homes in your area have sold recently and what they went for. You can also work with a real estate agent to help you compare houses.
3. Compare fairly
Make sure your comparison is fair. If there are neighborhoods in your city that are more desirable, consider that in your comparison. Also consider your location and what buyers want. If a similarly sized new-construction townhouse sold for top dollar down the block, you may not get the same amount for your cute ’40s bungalow.
4. Check the market history
To get a more comprehensive picture of the real estate market in your neighborhood, check the listing history of a home. Compare the original asking price with the final sale price, and note the amount of time the house was on the market until it sold. A REALTOR can help you with this step.
If you’re looking to speed up the process, you may want to price your house a bit lower. However, if profit is your motive, you may need to wait a few months for a sale on the high end of the spectrum.
5. Consider special improvements
Consider whether major improvements you’ve made warrant a higher asking price. If you’ve remodeled the kitchen and put down a new parquet floor, or if you really feel the special woodwork details will clinch the sale, make sure those enhancements are reflected in the price of the home. Be reasonable. Don’t be surprised if you don’t get as much money as you expected—improvements don’t always recoup their cost.
6. Don’t ignore supply and demand
In a buyer’s market, with many homes for sale and sellers competing for attention, you may want to ask a bit less for your home to make it more attractive to potential buyers. In a seller’s market, where there is little home supply and much buyer demand, you may want to ask a bit more and maximize your profit.
California Housing = DOWN PAYMENT ASSISTANCE (CHDAP)
CHDAP offers a 3% down payment or closing costs assistance with deferred payments.
640 (could possibly be as low as 630) minimum FICO
1% minimum investment
Available throughout the state of California
First time homebuyers
Available for SFR's, condo's and PUD's
*Income and sales price limits apply.
Buying Your First Home on a Teacher's Salary can be TOUGH! It just got easier!!
CalHFA would like to say, "thank you" to staff members serving California's high priority schools with the Extra Credit Teacher Program.
Down Payment Assistance
$7.500 for non-high cost areas
$15,000 for high cost areas
Interest forgiveness after three years
California Buyers: Purchase a home with as little as $1000 in down payment
Introducing the CalHFA Conventional loan program, with additional down payment assistance programs avaialble
First mortgage financing to 97% loan-to-value
Minimum borrower contributions:
$1500.00 for borrowers with credit scores between 640-679
$1000.00 for borrowers with a credit score of 680 or higher
Eligible for first time homebuyers and non-first time homebuyers
Can be combined with down payment assistance and other programs, such as:
California Housing Down Payment Assistance (CHDAP)
Extra Credit Teachers Program
Mortgage Credit Certificate
Homebuyer education required
Income restrictions apply
CalHFA is also available for FHA financing
For more information or to answer any questions please contact one of the Professional agents at Century 21 Gold 951-479-4580.
It might be helpful to review some of the common questions we receive about 1031 Exchanges. Your questions are welcome; we invite you to submit them to us at email@example.com or by phone at 951-479-4581 ask for Donna.
Below are just some of the questions we received;
Q. Do I absolutely need to use a qualified intermediary? To complete a 1031 Exchange, the IRS requires that you not touch the 1031 Exchange proceeds. Instead, it requires you go through a Qualified Intermediary (Accommodator)
A. In Short, you would have a taxable transaction without the use of a Qualified Intermediary. You are not permitted under IRS Regulations (Section 1.1031 of the Treasury Regulations) to have "constructive receipt" or "actual receipt" of the net proceeds generated from the sale of your relinquished property.
Q. Can a Family Member 1031 Exchange Into a TIC or JV?
A. in many cases, yes. However, you must be very careful and thorough review of the investment and transaction structure by your legal and tax advisers is very important before you proceed. The 1031 Exchange will fail if not properly structured
Q. Identification Requirements for Like-Kind Replacement Properties
A. There are very specific requirements for identifying and acquiring potential like-kind replacement properties in your 1031 Exchange transaction.
*** Answers listed above are just basic one sentence answers, please contact Donna for complete answers and help with 1031 Exchange questions. By calling you will not be obligated in anyway.We are offering help to those with questions
951-479-4581 or email firstname.lastname@example.org
By far, one of my favorite times of the year is the fall season. For us in Southern California, the fall season does not normally mean the changing of colors or dramatic temperature loss, but it does give way to the many great traditions that make me excited for this time of year. Ever since moving to Riverside four years ago, the Mission Inn Festival of Lights has been one of my main traditions during the fall season. It is an extravagant showing of Christmas lights that combines with the famous and historic California hotel for a unique night out in Riverside. It was even on the top ten destinations for holiday lights this year in the whole United States.
- Starts the day after Thanksgiving and can be crazy busy for opening night
- Hard to find parking on the weekends
- Some of the dinner places are only open during the weekends and not during the week
A little history and info on it is as follows.
“For 19 years, the Festival of Lights has been well known for its nearly three million Christmas lights, and over 400 animated figures. Although the Festival lasts all throughout the holiday season, the day after Thanksgiving is the lighting ceremony. On this day city officials and the owner of the hotel, Duane Roberts, give speeches before fireworks light up the sky and nearly 25,000 people attend annually to view the unique hotel and its holiday decorations. During the festival of lights, decorations including musical angels, carolers on the balconies, and a Santa Claus climbing the chimney are featured.”
The Mission Inn is of course the standout of the festivities. It has an insane amount of Christmas lights covering every inch of its exterior as well as snowflakes blinking on and off on the massive palm trees in the front of the hotel (A truly California addition). You can walk around the entire hotel multiples times and never see the same thing twice. Here is a short video I took with my phone that shows how awesome the entrance to the hotel is, but believe me you really need to see this in person to grasp it.
Every year it seems like it gets more fantastic and every year it seems like more people show up. Even with all of the people it never seems too crowded though and doesn’t take away from the magic of the decorations, assuming you can find parking. Check out more pictures below.
If you get a chance to go in the Mission Inn you can also see the beautiful tree they have in the lobby which is huge and always very well decorated.
While the Mission Inn is the reason to come, the surrounding activities allow you to make it into a full night. There are many restaurants around the area at which you can get a meal. I personally would recommend Simple Simons as it is one of my favorites in the area and has great sandwiches but you never know when it is open. If you are just looking for a snack there is a cupcake shop, the Gingerbread House, mini donut and even a funnel cake stands. You can also go to Salted Pig which is amazing but a little bit away from the Mission Inn area.
You can even take a carriage ride around to see the lights in style. You shouldn’t have to wait to long as there were about 6 different carriages running when I was there.
If neither of these sound fun there is also a full ice skating rink next to a statue of Ghandi and many vendors selling light up toys for children.
Serious buyers want to find a home. They've been pre-qualified by a lender, chosen a real estate agent, and are ready to make an offer on the right home.
A Lookie-Loo is a person who is not seriously in the market to buy a home. "Loo" could be a nosy neighbor, an open house junkie, or worst of all - someone who thinks they're serious, but are incapable of making a realistic offer.
In determining your marketing strategy, your real estate professional knows what will work to get serious buyers coming to see your home, and what will discourage people who will waste your time.
Attract Serious Buyers
In any market, your home is competing with new construction that offers never-lived-in appeal - pristine appointments, hardwood floors, granite countertops, stainless steel appliances, and more. In a slow market, builders offer landscaping discounts, points on mortgage loans, and decorating allowances as incentives.
Your home is also competing with your neighbors' homes for sale, which may be in better condition or more updated than yours. You may also be in a market that still has a large number of foreclosures that are pulling home prices down.
The point is that buyers want the most value, no matter what the market is doing. Don't assume that because home prices are up and sales are picking up that buyers will negotiate any less. Verify market prices with your agent. Price your home for today's market reality.
Your job is to prepare your home to attract serious buyers. Move-in ready condition is what most buyers want, and you have to provide it. Your agent's job is network, advertise, and market to make buyers aware of your home and interested in buying it. If the marketing pictures show a problem, you're not going to attract serious buyers.
Stage your home to best advantage - declutter, depersonalize, clean thoroughly, enhance curb appeal, fresh paint, fresh landscaping. Fix every little thing that's broken or not working smoothly - no sticking drawers, no wobbly doorknobs. Don't give buyers room to make unrealistic offers.
Do something extra for your home - some remodeling, new appliances, new countertops can work wonders for buyers. Do something extra for the buyer, like provide a history of the home.
The only thing your agent can do to discourage Lookie-Loos is to encourage serious buyers to consider your home. Your agent can network with other agents and tell them all the things you've done to attract a serious, realistic offer. They will bring qualified, interested buyers to view your home.
Make sure your agent creates a really good online presentation of your home with lots of pictures, a virtual tour, local amenities, school data, and more. The idea is to give buyers enough information to put your home on their short list.
Your agent can also employ niche marketing and out of box marketing ideas. If your home is near a college, for example, she can advertise in college papers, alumni magazines, billboards or student housing websites.
The more questions you can answer about your home and neighborhood online, the less interested Lookie-Loos will be in traipsing through your home, either at an open house or with their agents.
If you do have an open house, don't make it easy for people to have the run of your home. Have your agent register visitors and view their identification. Serious buyers won't be offended but non-serious buyers will be very reluctant to provide personal information. Those are the people you don't need.
Despite your precautions, some Lookie-Loos will slip through, making appointments that waste your agent's time and yours, but look at it this way - if your home is ready for market and priced to sell, it's a good deal for any buyer, even a Lookie-Loo.
There is nothing more important than feeling secure in your own home. While we can only control a small bit of the world around us, we should always be sure that we are keeping our home safe. Here is some basic information to keep your home safe. The goal of securing your home is to protect your possessions, but also at the same time protecting the people who live there. According to The California Association of Realtors, these are the 10 tips you should follow in order to be well on the road to greater peace of mind.
Be a friendly and observant neighbor: Neighborhoods with a “community watch” where each person is looking out for one another provides a sense of security. Generally people know each other and know who lives where. This type of activity makes it easier to talk about crime and helps homeowners to solve problems. Let neighbors know that you are crime conscious, and encourage them to be so, too. Provide your neighbor with contact information if you are leaving on vacation so that they can be in touch should there be any unusual activity around your home.
Have adequate lighting: On the outside of your home, lighted entryways and flood lights with motion sensors ensure that everyone, including you and your neighbors can see who is entering your home. However, be sure to replace burned out bulbs immediately before your home becomes a target for intruders. Inside your home, ensure that there is adequate lighting so intruders are easily visible.
Create limited entries with a perimeter and gate: Gates and fences can easily provide a feeling of stable security. Tasteful fencing can create a feeling of “place” that provides a positive look and feel to your home, while also adding a boundary for criminals.
Be discreet: While you do want neighbors to be informed of your plans, advertising that you will be away from your home is not a wise idea. When seeking to find a house sitter or pet sitter, avoid advertising the dates of your travel. With an increase in social media, people who are outside of your immediate circles could easily gain access to your plans. Be discreet about your plans, and only inform neighbors of your travel plans that will be monitoring your home.
Get a security system: There are currently many types of systems. Some produce loud alarms that will alert neighbors while others are silent and contact police. While it is good to have a system in your home, please beware of giving away too much information so that criminals don't know which system they are dealing with. Typically these systems monitor entries, but many also include motion sensors. Also note, these systems require power to run, so during power outages unless there is a backup power source they will not be functional and other preventative steps will be required.
Get a safe: Using a home safe to secure valuables, guns and ammunition is an excellent idea. Also using a safe to store important paperwork, like deeds, wills, other legal documents, social security cards, passports, as well as computer backups and photos is a good idea. While safes are often quite heavy, be sure that they are bolted down so they are not easily stolen.
Check your doors, windows and all locks: Deadbolts and steel outer doors are important, as well as secure windows that lock. A huge majority of burglaries are no-force entries, where intruders gain access to your home through an unlocked window or door, so please check them frequently. Keep trees and bushes trimmed to prevent access to windows and decks on upper floors. Simply placing a piece of wood in sliding glass doors or windows can prevent entry. Automatic garage door openers ensure that access to your garage is controlled. Studies show that the more difficult it is to enter the home, the greater the chances are that the burglar will move on.
Put on a good show: When you are going to be away from home for any period of time, make it look like someone is home. Most often intruders are looking to steal valuable items and would rather not encounter people at all. Keep shades as they would normally be, and use timers to control lights and even music. It is a good idea to stop newspaper deliveries or even have someone stop by daily or stay in the home to pick up mail and newspapers.
Get a dog: In addition to a dog being a great companion, a dog can also be an excellent deterrent to a burglar as barking serves as a great alarm.
Don't leave your keys around: If a burglar sees a car in a garage or driveway and the keys are in the car, this is a easy target for burglars. Have a place for keys that is not well known or easily seen.
Please take the time to follow these simple tips and prevent crime in your neighborhood and in your home.
When you watch home improvement shows, the professionals make it look so easy to tear out a wall, replace a roof, or set new tile in the bath.
Yes, you save a lot of money when you do-it-yourself (DIY), but in some situations, you're better off paying the expert (PTE). According to Angie Hicks, founder of Angie's List, some jobs aren't as simple or as safe to do as they look.
In a recent interview, Hicks pointed out that some DIY jobs end in disaster. More than 136,000 DIY injuries require medical attention annually. As many as 35,000 injuries were from nail guns.
Forbes Magazine reports that workshop injuries are even higher - 400,000 annually. Most injuries are caused by pilot error -- an operator who fails to respect safety rules. Wear goggles, use clamps where needed, check electrical cords for fraying, and keep your tools clean and sharp. Be sure to always use the correct tool for the job.
And let's not forget errors of judgment. Don't work while you're tired, or under the influence of a drug or alcohol. And definitely don't tackle a job beyond your knowledge.
Before you begin a DIY project, Angie recommends that you ask yourself three questions:
- Do you have the right training and experience?
- Do you have the time to do the job right?
- Do you have the correct tools?
When Angie's List members were polled about DIY mistakes, 30 percent of respondents said that they saved money, but 10 percent said they were injured on the project, such as falling off a ladder.
Sometimes, there are so many issues and costs to do a job, that you might be better off hiring a contractor.
Let's say you want to paint a room. You're willing to give up a weekend. First you measure your room so you'll know how much paint to buy. Do you know what kind of paint to buy, and will one coat cover the color you're painting over? And what about the trim? Latex or oil-base? There's also painter's tape, plastic for the furniture, brushes and rollers, sandpaper, and other supplies.
When you total all that, you might be better off hiring a painting contractor. You'll be paying retail, while a professional painter gets the same items wholesale.
If you do want to DIY, Angie recommends starting with a small job, like replacing kitchen drawer knobs and stay away from jobs that require a license, such as those held by electricians or plumbers.
Home improvement expert Don Vanderwort suggests that you should avoid doing jobs yourself that may be "dangerous, particularly difficult, or where a mistake can be quite costly. Some jobs simply are not worth the risk."
He says to think twice before attempting roofing, removing or pouring concrete, siding work requiring scaffolding higher than two stories, or work where there may be "hidden mysteries."
The bottom line is you want a professional-looking result. If you don't think you can do job well, it's time to hire the expert.
Real Estate Agents (Eastvale, CA)
Century 21 Gold is now hiring new and experienced agents. We have listings and need agents to help with buyers as well as agents to continue to bring in new listings.
We offer; FREE advertising of listings, FREE LEADS, NO Desk FEES as well as continued training and education.
Fair commission splits and so much more. Please contact Donna 909-215-5409 for a confidential interview.
We also offer RE School in our office on a regular basis. Call Donna for more details.
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A lot of sellers don't listen to their real estate agents, so we'll tell you what your agent wants to say, but can't say to you and this is it - your agent can't get you the price you want unless your home is in pristine move-in condition.
That means no sticking drawers in the kitchen. No leaning fences. No rust-stained plumbing fixtures. We could go on, but maybe we need to make it clear. If you have even one of following "turn-offs," your home won't sell.
Buyers can get instantly turned off. Here are their five biggest turn-offs:
- Overpriced for the market
- Deferred maintenance
- Dark, dated décor
Overpricing your home
Overpricing your home is like trying to crash the country club without a membership. You'll be found out and escorted out.
If you ignored your agent's advice and listed at a higher price than recommended, you're going to get some negative feedback from buyers. The worst feedback, of course, is silence. That could include no showings and no offers.
The problem with overpricing your home is that the buyers who are qualified to buy your home won't see it because they're shopping in a lower price range. The buyers who do it will quickly realize that there are other homes in the same price range that offer more value.
Smells can come from a number of sources - pets, lack of cleanliness, stale air, water damage, and much more. You may not even notice it, but your real estate agent may have hinted to you that something needs to be done.
There's not a buyer in the world that will buy a home that smells unless they're investors looking for a bargain. Even so, they'll get a forensic inspection to find out the source of the smells. If they find anything like undisclosed water damage, or pet urine under the "new" carpet, then they will either severely discount their offer or walk away.
If your tables are full to the edges with photos, figurines, mail, and drinking glasses, buyers' attention is going to more focused on running the gauntlet of your living room without breaking any Hummels than in considering your home for purchase.
Too much furniture confuses the eye - it makes it really difficult for buyers to see the proportions of rooms. If they can't see what they need to know, they move on to the next home.
Deferred maintenance is a polite euphemism for letting your home fall apart. Just like people age due to the effects of the sun, wind and gravity, so do structures like your home. Things wear out, break and weather, and it's your job as a homeowner to keep your home repaired.
Your buyers really want a home that's been well-maintained. They don't want to wonder what needs to fixed next or how much it will cost.
The reason people are looking at your home instead of buying brand new is because of cost and location. They want your neighborhood, but that doesn't mean they want a dated-looking home. Just like they want a home in good repair, they want a home that looks updated, even if it's from a different era.
Harvest gold and avocado green from the seventies; soft blues and mauves from the eighties, jewel tones from the nineties, and onyx and pewter from the oughts are all colorways that can date your home. Textures like popcorn ceilings, shag or berber carpet, and flocked wallpaper can also date your home.
When you're behind the times, buyers don't want to join you. They want to be perceived as savvy and cool.
In conclusion, the market is a brutal mirror. If you're guilty of not putting money into your home because you believe it's an investment that others should pay you to profit, you're in for a rude awakening. You'll be stuck with an asset that isn't selling.
To develop your interior color scheme, the color wheel is a good place to start. Learning how colors are created and what effect they have on you can be useful in helping you set the ambiance you want for your home.
If there were only 12 colors in the universe, choosing a decorating color scheme wouldn't be difficult, but it's the millions of variations of the color wheel that complicate matters. The impact colors have on how you want to feel is largely due to how much chroma or intensity they have. The more chroma or pigment a color has, the more intense it is.
A highly saturated hue or color is energetic, attention-grabbing, and bold. Hue is another word for pure color, the point at which any color is at its clearest. See: color-wheel-artist.com
If you add white, you soften the hue, cool it down and turn it toward a pastel version of itself, otherwise known as a tint. The less chroma you have, the lighter the tint. Tints are like the early buds of spring - youthful, delicate and gentle.
When you add black to any hue, you deepen and darken the color, which is known as a shade. Shades tend to be rich, mysterious, and sophisticated.
A tone is composed of a hue with added grey, or a blend of white and black. Tones tend to be neutral, relaxing and comforting. Think of the expression "toned down."
Color and mood
Keeping the effects of hues, tints, shades and tones in mind, colors have the power to energize or to relax you, to annoy you or to soothe you. To choose a main color for your décor, think about how you want to feel when you're in your home.
The main color is what you will use on the largest areas of the home - walls, ceilings floors or furniture.
Do you want your home to be a retreat, a haven? You can try the colors of nature - earth tones of beiges, browns and greens. If you prefer cool colors, try soft hues of blue.
Whatever you choose as your main color, you can punch it up or tone it down by putting other colors around it. You can also control the impact of the color by using it in an entire room or on one wall as an accent. You can control the intensity by changing the hue, shade, tint or tone.
For example, you may choose a neutral beige or tan for your couch and draw attention to it with bright orange accent pillows.
Placing color for effect
Start by choosing the color family you want based on your favorite hue. You may love vivid colors such as fire engine red or royal blue. Imagine the whole room done in your color and you may begin to see a problem - that the hue is simply too intense.
Next, try to imagine an accent wall in your favorite hue. Still too intense? You don't have to give up your signature color. You can always use fire engine red on the front door or a chair seat or in a painting.
Choose whether or not you want the color on the walls to be dark or light, and that will tell you whether or not you want to go in the direction of a tint or a shade.
Darker rooms are cozier and more calming, but they can also make a space seem smaller. If you prefer the drama of a spicy or deeper shade on your walls, you can lighten the effect by painting your doors, trim and crown molding a soft white which will make any wall color pop.
One way you can choose colors for your home is by colors you enjoy wearing. If you feel pretty in pink or handsome in oxford blue, think about using those colors somewhere in your home. You'll enjoy colors more if they're flattering to you as well as to your furnishings.
The beauty of color theory is that you can use almost any color you wish in a home, if it's in the right amounts and appropriate to the architecture or the home and the use of the room.
For most buyers, the mortgage is the largest monthly expense they will have. Yet most borrowers will do little to no preparation, negotiation, or shopping to get the best deal. And they end up paying much more for their loans than they need to. You? You're smarter than that, or you wouldn't be reading this article. Here are five of the biggest mistakes that can cost you real money.
1. Believing advertised rates are what you'll pay
Unless you have perfect or near-perfect credit, most advertised rates are out of your league. To get boasting rights on a rate that good, you have to pay part of a point (one percent of the loan amount) a point, or more to get the best rates.
Your lender will go over your credit with a fine-tooth comb to find anything to raise the rate. That includes qualifying you at the beginning of the transaction, and then running your credit again a day or two before you're supposed to close on the home and loan. If there's been any change in your debt-to-income ratio, goodbye low mortgage rate.
2. Not comparing lenders
Just like everyone knows two or three real estate agents or more, everyone knows a loan officer or a mortgage broker. A loan officer works for a bank or savings and loan and can only offer you loan packages that the bank has put together. A mortgage broker prequalifies you just like a loan officer, and shops your deal around to various lenders.
Whether you talk to a loan officer or a mortgage broker, you're going to have to share personal financial information in order to get a realistic rate. Reputable brokers will show you what certain banks and credit unions quoted and you can pick the loan you like best.
If you'd rather do your own shopping, consider talking to a local bank, a national bank, a credit union, and a savings and loan, but remember, unless you give them personal information and permission to run your credit, it's just talk.
3. Not paying attention to terms
Advertised rates even for those with perfect credit aren't what you will actually pay. The true cost of the loan is the APR or annual percentage rate, which includes fees from the lender.
Understanding loan terms is harder than shopping for a new mattress. There are so many ways lenders can inch up the fees. A loan origination fee is also called a processing fee. It pays the loan officer or mortgage broker, so this fee can vary widely. You may pay one lender more for an appraisal than another might charge you.
One lender may charge more for pulling your credit than another. It's all in your good faith estimate, which you don't get until you've applied for the loan.
All terms are negotiable, so don't be afraid to ask what a particular fee is for and can it be reduced or eliminated.
4. Waiting for a better rate
It's great to have bragging rights on a low rate, but you don't want to lose the home of your dreams over a quarter of a point in interest.
There's a big picture here you could be missing. No matter what your interest rate is, you're going to pay thousands of dollars in interest up front before you make any serious gain in equity. If you go all the way to the end of your loan's term, you'll pay so much interest that you could have bought the same home two or three times.
Instead of focusing on the percentage rate, work on how quickly you can build equity. Make one extra payment a year. Pay $25, $100, or $500 extra per month and you'll more than offset the rate you're paying.
Down the road, if rates drop through the floor, you can refinance, but even that's not an ideal solution. You'll pay loan origination fees, title search fees, appraisal fees and so on -- enough to equal the closing costs you paid the first time around.
And don't forget, you'll start the amortization schedule all over again -- with most of your payments going to interest instead of principal.
5. Choosing the wrong type of loan
Many families were hurt post-9/11 when lenders opened the spigots and gave a loan to almost anyone who could sign the paperwork. Suckers bought homes that were too expensive using balloon loans with low teaser rates.
The type of loan you choose should depend on current market conditions and how long you plan to stay in your home, not how much home you want to buy.
Current market conditions favor fixed rates, because rates are rising from all-time lows. Yes, they cost more than hybrid loans or adjustable rate loans, but the base amount is fixed and doesn't change. Only your taxes and hazard insurance will cost you more over the years.
If you get an adjustable rate mortgage, you are at the mercy of market conditions. While there's a cap on how high your interest rate can go, it's still a risk.
If you plan to stay in your home five years or more, get a fixed-rate mortgage. If you plan to sell your home sooner, you're taking a risk. It takes most borrowers five years just to earn back their original closing costs in equity.
Once you've narrowed your choice of lenders, ask them on the same day to give you a quote. If you wait even one day, rates may have changed, so you're no longer comparing apples to apples.
How to Come Up with the Down
Saving for a down payment is tough
– especially if you’re a young home shopper. Here are saving strategies that
millennials and other cash-strapped, would-be buyers can use to get into a home
For many prospective homebuyers,
saving for a down payment can be a struggle. But without the necessary upfront
finances, the dream of homeownership can be difficult to achieve.
This especially is true for younger
According to a recent survey published
by Trulia, 60 percent of millennials (aged 18 to 34) indicate that finances are
the largest sole barrier preventing them from owning of home (approximately 50
percent of respondents said they would turn to parents or grandparents for
financial assistance to purchase a residence). Further, a newly published
report from Harvard’s Joint Center for Housing Studies revealed that mounting
student-loan debt likely would delay homeownership for the group. The share of
households (aged 25 to 24) with student-loan debt increased from 26 percent to
39 percent from 2001 to 2010, according to the report; homeownership rates for
this group also dropped nearly 8 percentage points between 2004 and 2013.
It’s simply harder for today’s
buyers to come up with the necessary down payment, particular Gen Yers, says
Carole Short, a Realtor with Coldwell Banker Residential Brokerage in Atlanta.
“Many Millennials are straddled not
only with consumer debt but student loan debt payments. With the cost of living
going up for the basics – housing, food, phone … today’s buyers often are
struggling financially and living paycheck to paycheck,” Short says.
While low- and no-money-down loans
were offered aplenty prior to the housing downturn, most lenders today typically
require at least 20 percent down—which is the minimum needed to avoid having to
pay costly private mortgage insurance. However, an FHA loan requires only 3.5
percent down, and many conventional loan programs stipulate as little as 5
Beginning to save now, with the
goal of purchasing sooner, is a smart move given the continued climate of
favorable mortgage interest rates, say the experts.
“The idea is to buy now. Rates are
low, and real estate is a great investment that accumulates equity,” says Yael
Ishakis, vice president at First Meridian Mortgage in Pomona, New York.
Saving, however, often requires
homeowner hopefuls to make sacrifices. Alarmingly, the aforementioned Trulia
survey reported that many Millennials aren’t prepared to give up the following
to save for a down payment: car (65 percent); smartphone (45 percent); cable
(20 percent); Netflix subscription (15 percent); and vacations (14 percent).
“Unlike baby boomers, who wanted to
strike out on their own, millennials aren’t as eager to cut the apron strings
or give up some of their indulgences. But cutting back on eating out, cable,
shopping and even that morning cup of coffee can all add up,” says Sheryl
Simon, a principal Benoit Mizner Simon and Co., a real estate firm in Wellesley,
Those determined to purchase also
have to be willing to prioritize goals, work hard, and seek assistance, Simon
“Rent a smaller apartment that is
lower than your actual budget. Take on an extra job you can fit in on the side.
If you’ve just tied the knot, try not to spend all your gift cash on a
honeymoon. And speak to a financial planner to set goals and guidelines to put
you on a path to homeownership,” says Simon.
Lastly, be prepared for other
essential items you’ll need to salt away funds for aside from the down payment,
including closing costs (often 2 to 3 percent of the loan amount), furniture,
and home improvements you may need to make after purchasing.
© CTW Features
If you're entering into the real estate market for the first time, you'll hear the old adage: location, location, location. That's three of the key factors... I'm kidding but, location is, indeed, a very important concern.
However, many buyers think location is most important because of the surrounding area. So, if the neighborhood is nice, with parks, good schools, retail stores nearby, and somewhat close to freeways, it's a good location. But what also makes it a good location is how close it is to your work.
These days many people are telecommuting, which allows them to work from home and save gas. If that's the case, a 45-minute or hour-plus drive, one-way to the office, might not be too intimidating because you're not going to have to do it every day. But your long commute could still become a key factor when it comes to getting a mortgage.
Some lenders may factor in your long commute as part of your overall debt-to-income ratio, (DTI) which will directly impact how much money you can borrow. Regardless of whether the lender takes your extended commute into consideration, buyers should. With rising gas prices and increasing traffic, an extra long commute to the office can hurt your pocketbook.
A study from the Center for Housing Policy and the Center for Neighborhood Technology reported that transportation expenses for households in the largest metro areas increased 44 percent from 2000 to 2010. And about 600,000 full-time workers have a huge commute of at least 90 minutes and 50 miles to get to the office, according to U.S. Census data.
Sometimes the allure of rural areas with typically less expensive housing prices is so strong that buyers forget to consider how long they'll be on the road before they're home at night. They also don't factor in the gas costs that add up fast and can amount to hundreds of dollars in expenses each month.
If you do purchase a home with a long commute, talk to your company about possible commuting subsidies, arrange a carpool, or try to work remotely more frequently to reduce the back and forth commute. eRideShare.com help connect people with others who live and work nearby. Some cities even have their own sponsored program for free online matching services for carpooling. You can also ask your work to adjust your hours so that you can come in and leave at times when you'll miss rush hours. This way you're not just burning gas while sitting in tight, slow-moving traffic.
Cities with good mass transit are attracting buyers and providing options that help avoid putting extra unwanted miles on their vehicles. It makes sense. Sometimes the commute, if they don't have to drive, is a welcome break giving workers time to catch up on a good book, movie, or extra work. Plus, some cities have waterway ferries that make it a beautiful and enjoyable commute.
If you're shopping for a home and considering the long commute, spend a little time weighing the pros and cons. Also, do a little research. You can visit commutesolutions.org to use their online calculator to determine the true cost of your driving commute. Having a road map that shows your expected expenses will help you accurately budget for them.