What a Deal!

October 29, 2012

A 30 year fixed-rate mortgage hasn’t always been the standard. As part of FDR’s New Deal in 1934, the Federal Housing Administration was created to help Americans purchase homes with affordable terms.fdr.png

Prior to then, many loans had an amount due at the end of the term called a balloon. Most mortgages had adjustable interest rates even though some might be fixed for a short time. While banks would loan money on a home, they retained the right to call the note due at any time which could exert considerable stress on borrowers.

FHA, during this time, introduced mortgages that offered a fixed rate of interest to the borrower for a 30 year term. This fully amortized loan provided borrowers a financial vehicle that would help them achieve the American Dream while minimizing the risk of having a loan called without the resources to pay it off. It brought long-term stability to the housing market and helped stimulate the economic recovery at a very difficult time in our nation’s history.

Roughly, a third of the mortgages created in 2011 were less than 30 year terms. Many homeowners, similar to those after the Great Depression, would like to get their home paid for as soon as possible. Shorter term mortgages typically have a lower interest rate but higher payments due to fewer years to amortize the mortgage.

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October 28, 2012

My friend Scott McNelley. Checked out some of his past posts and thought this one worthy of reblogging.

Montgomery Office Mover

Avoid a move nightmare I get folks from time to time who come up to me with a story about a move they had. It is not normally a very happy memory, they wish that it had happened to someone else. Many times they say have you ever heard of this fellow? Or have you heard of this company? I generally know what is coming, damage, inflated bills, theft, and now NO returned phone calls. One time I even got ” I paid ABC mover a 500.00 deposit and he never showed and now I can not get him to call me back. Heck we had a mover in town that was putting items in a mini storage, then not paying the bill and the goods get auctioned. Can you imagine loosing everything you have, and you guessed it no insurance. Remember the old adage if it seems to good to be true…..

I…

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Fearful?

October 28, 2012

I brought in a speaker this week to pep the agents up and get them focused on getting back to basics with their prospecting skills.  Bob is a superb instructor, REALTOR® and friend.   One important part of his presentation was on fear.  Face your fear and fear goes away.  Being fearful keeps us from accomplishing our dreams and goals.   How many opportunities do we miss because we are afraid to go for it?  Fear exists as a form of protection and signals warning signs, but a healthy fear (stepping away from the edge of a cliff) and living in constant fear are very different.  There are steps we can take to take control of our fears.

1.  Relationships with others.  Sharing our fears with friends can help us overcome challenges.  Friends will talk us through and encourage us.

2.  Become disciplined with normal activities which instill a sense of security.  Familiarity breeds comfort and helps you feel in control.  By having contol of certain things in my life, I’m less anxious about taking on new challenges.

3.  Chill out.  I began an exercise program this past May by joining a local gym.  My main purpose was to do something to help strengthen a bad back, get in better physical condition, lose weight and just plain feel better.  What I discovered was my mental health was drastically affected.  In a good way.  I find I am handling stressful events better.  Fear is therefore less present in those situations.

4.  Facing fear head on.  My most present fear right now is obtaining my real estate instructors license.  Although I have taught many a class, trained agents, spoken for groups, led committees, served on Boards, task forces, etc…, this is a bit more daunting because I will be accountable to an authority that can audit and critique me and yank my license!  When I do something I want to be great at it, not just average.  I have alot to learn and this will be a new learning curve for me.

No matter how experienced we are, we should never become complacent in improving ourselves.  Keep learning.  Keep stepping up to fear and take it down!

Rent or Buy?

October 22, 2012

The question plaguing every tenant who wants a home of their own is whether they should continue to rent or is it the right time to buy?

The combination of good prices and low mortgage rates make it considerably cheaper to own than rent in most markets. Assuming a person is qualified with a down payment and won’t be moving for several years, there may not be a better time to buy a home.

In the example below, the total house payment is $1,281.01 compared to $1,500 to rent the same home. Before you consider any of the financial benefits attached to home ownership, it’s cheaper to own than to rent.

The net cost of housing falls to $764 or just more than half the house payment when you consider the principal reduction due to normal amortization, a modest appreciation and the tax savings along with a reasonable maintenance expense that a tenant would not have to pay.

One of the biggest benefits is the growing equity. As the value goes up, the unpaid balance goes down. A favorable leverage causes their low down payment to grow to $40,609 in a short seven years based on a modest 1% appreciation.

There’s an expression often heard in real estate circles: “Whether you rent or buy, you pay for the house you occupy.” You’re either buying it for yourself or you’re helping the landlord buy it.

Check out a Rent vs. Own to see how your numbers will compare to this example or call me to do it for you.

Welcome to the world Maggie Ellis Andrews!  My newest grand baby was born October 10th at 9 lbs. 3 oz.  In my eyes, she is perfect in every way.  My prayer for her is to learn a song she will hum fifty years from now, be as graceful and grand as an eagle soaring, learn to laugh until it hurts, be a friend to someone who has never known one, to feel loved, wanted and safe, and never regret her past.  Seeing my son and daughter in law in her face I’m reminded of the gift of life and the incredible responsibility we all have in rearing a child.  What a blessing to be able to share my life with her.

Contributing Factors

October 15, 2012

Rental properties have four primary factors that contribute to a return on investment. Based on market conditions and investor strategies, the individual motivating factor can change for property owners.

There was a time when the benefit of tax savings to offset income from other sources was considered important to some investors. However, in today’s environment, they are more likely valued as incidental benefits.

Some investors expect appreciation to deliver the satisfactory results which can be reasonable over time if a reliable appreciation rate is used. Savvy investors today are using conservative estimates for long-term holding periods.

Leverage occurs when borrowed funds are used to control a larger asset. Positive leverage can actually increase the yield on an investment.

The fourth component that contributes to a property’s yield is the cash flow. When the rents are greater than the expenses of operating the property and servicing the debt, there is a positive cash flow. A property with a good cash flow doesn’t have to go up in value to justify the investment.

The combination of lower prices, incredibly low mortgage rates and rising rents are attracting investors to rental properties that include single-family homes in predominantly owner-occupied neighborhoods.

Even if you were to ignore the benefits of tax savings, potential appreciation and leverage, the attractive cash flows make rental property a very smart investment alternative. If you’re curious, contact me for more information.

Pets and babies

October 9, 2012

Today I lost my 9 year old grand dog.  What a great dog my son gave his future wife back in 2003.  He lived through college, moving, new homes, a grandson and was well loved.  Our pets are our first children usually.  They love us unconditionally and are totally dependent on us.  I’m thankful Oscar had loving parents that took good care of him all these years.  You will be missed.  Here’s a video my son made in his honor.

Our new grandbaby, Maggie Ellis Andrews, will be making her debut tomorrow morning!  Stay tuned for more on that.

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