Consider a Vacation Home for Fun Times, Investment Returns- Bay Area Real Estate

Glorious summer days at the lake…the grandkids frolicking at the shore…or a warm fireplace as you wait for the perfect powder at your ski retreat. A vacation home builds memories and it can be a great investment.

In most vacation hot spots, second-home prices are at five-year lows. Some in California and Florida can be had for 47 percent below their 2006 price. Bargains are likely to be available within a couple of hundred miles from where you live.

* There’s more to a vacation place than fun and up-front bargains. In the future, the home will be an appreciating asset. Economists say prices are already rising and will continue to rise for at least the next five years.

* The home is a better deal if it’s rentable. The rental potential puts money in your pocket, but it also increases resale value.

* The typical vacation property rents out about 17 weeks a year, according to HomeAway.com. Ask a property management company how much comparable properties rent for by the week. While the rent won’t pay all your expenses, it will help with the mortgage, utilities, taxes and maintenance.

* You will meet and become friends with an entirely new group of people when you own a vacation home. Lifelong friends are made with neighbors and in the community.

* You’ll have tax benefits. Rent it out for less than two weeks, and you won’t have to report the income to the IRS.

* If you rent the home for two weeks or more, you can deduct operating costs, such as maintenance, cleaning, mortgage interest and property tax. You allocate the write-off between personal and rental use.

* As with any rental property, distance is important. Less than 200 miles from your primary home is best.

Finance

* When the property is classified as a second home, you’ll get about the same interest rate and terms as on a home loan, according to HSH Associates.

* If you need the rental property income to qualify for a mortgage, it will be classified as an investment property. The down payment will be higher and the interest rate will be about 1 percent more.

Please keep in mind that I’m always available to serve you and others with financing needs.

For more helpful resources visit BayAreaHomeBuyersInfo.com!

Should I Pay Off My Mortgage?- Bay Area Real Estate

Homeowners may dream of the day they can pay off the mortgage. Financial advisors across the country say they are hearing questions all the time about the wisdom of retiring the mortgage early.

The pros:

* The obvious reason to do it: Paying off the home loan could save tens of thousands of dollars in interest during the time you would make payments.

* The second reason is the peace of mind you have from owning your home free and clear.

* Most experts recommend owning your home free and clear before you retire.

* If you still have a higher interest mortgage, paying down your principle will make refinancing easier.

The cons:

* Some financial needs should come first: Max out your 401(k) contributions. Pay off credit cards. Create a 6-month emergency cash fund.

* Mortgages are cheap money. When you pay down your mortgage or pay more every month, you are probably hoping for those big dollar savings on interest. But remember these are future dollars and they will be worth less 20 years from now. Keep your higher value dollar today and pay the bank its lower value dollar in the future.

* If you plan to move to another city or trade up or down, it’s not wise to pay off the mortgage. You would tie up your money in a home you might not be able to sell very soon when you want to buy another one.

* The mortgage interest tax deduction doesn’t help everyone. If you are in a high tax bracket, it’s more valuable. If you are retiring or in a lower tax bracket, it’s not worth as much.

* Check to see if the investment you could make with the payoff money would earn more interest than what you are presently paying on your home loan. A 50/50 stock/bond portfolio has historically earned 8.2 percent in the long term, but might only make 6 percent now, according to Money magazine.

Their conclusion The Money experts say that if paying off the mortgage would give you great satisfaction and a sense of security, go ahead and do it.

Please keep in mind that I’m always available to serve you and others with financing needs.

For more helpful resources visit BayAreaHomeBuyersInfo.com!