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!

Houses are More Affordable Now Than In The Last 35 Years-Bay Area Real Estate

Statistically speaking, this is the best time to buy a home since your parents took the plunge 35 years ago, according to the housing affordability index.

 

But maybe you’re tired of hearing about statistical matters and just want to know how this affects your pocketbook.

If your parents bought a home in 1963, it probably cost them 43 percent of your dad’s income to finance it. If they were buying that same home right now, it would take only about 22 percent of their monthly income to finance it.

The National Association of Realtors today recommends an average of 25 percent of an individual or family pretax income. That means no more than 25 percent can be spent on mortgage payments, taxes, insurance and utilities.
Because the affordability index is now 22 percent, a home buyer would be in a better position than the association recommends.

Still, people who need a home may be confused about whether this is a good time to buy. They wonder if it will cost even less to buy a home in the future.

That isn’t likely to happen, because interest rates and inflation have a big impact on the true cost of buying a home. And both are going up.

The chief economist at Moody’s Analytics says, “Based on incomes, this is as affordable as it gets. If you can get a loan, these are pretty good times to buy.”

For renters, that is especially true. Those who are renting a nice apartment or home for $1,000 a month, for example, will typically experience a 3 percent rise in their rent per year.

At that rate, over the next 10 years, they would pay a total of $137,567 in rents.

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

For more helpful resources visit BayAreaHomeBuyersInfo.com!

Six Unobvious Reasons to Recycle- Bay Area Real Estate

1. Protect your home from hazardous waste. The average American home accumulates up to 20 pounds of hazardous waste each year. Even more frightening, usually 100 pounds of waste is stored in cabinets, the garage, closets, basements, and other storage spaces in the average home.

 

2. Help the community and local job options by donating to the Goodwill, which collects electronics as well as most other things, to recycle or sell. They use the profits to help fund job training and employment opportunties in the local community.

3. You can hold a recycling event as a fundraiser for one of your favorite causes (a local school, sports league, church, etc.) with the help of www.recyclingforcharities.com

4. According to the Environmental Protection Agency, American households own an average of 24 electronic products that could be potentially donated or recycled. 85% of them end up in landfills instead.

5. Recycling is less expensive than sending trash to a landfill. According to www.ecocycle.org, recycling instead of landfilling saves $55 per ton, saving you money, along with the environmental benefits.

6. Stimulate the economy by creating jobs. Eco-Cycle states that “For every one job at a landfill, there are ten jobs in recycling processing and 25 jobs in recycling-based manufacturers. The recycling industry employs more workers than the auto industry.”

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

For more helpful resources visit BayAreaHomeBuyersInfo.com!

Advantages of Paying Points- Bay Area Real Estate

"Why pay points when financing my home?" 

This is one of the most frequently asked questions when considering locking an interest rate. 

Here are a few good reasons: 

• Points paid on a purchase transaction are a tax deduction in the year of the close of escrow.

• Paying points can dramatically reduce the interest rate on the loan.

• Lowering the rate lowers the payment, lowering the income needed to qualify.

• A lower rate saves the buyer thousands of dollars over the life of the loan.

• There’s never been a better time to buy down a rate.  

• Historically .50 point lowered the rate by .125%
• Now .50 point lowers the rate by nearly .20%

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

For more helpful resources visit BayAreaHomeBuyersInfo.com!

FHA Premiums Increased This Spring- Bay Area Real Estate

Federal Housing Agency (FHA) loan premiums have increased marginally starting on April 18.  The annual mortgage insurance premium raised a quarter of a point for borrowers, applying to all FHA loans taken on or after April 18.  The increased premium does not apply to loans made before the increase date.

 

These government loans are extremely popular, and the agency does not believe this will have a large effect on the overall affordability of the loans.

According to the New York Times, “the new rate structure would raise the cost of a $157,000 mortgage, a typical F.H.A. loan amount, by about $33 a month, or $396 a year.”

FHA loans have becoming increasingly popular over the past year, with about 30 percent of home purchases made with them.  Just five years before, only about 6 percent of home purchases were made with FHA loans.

Call me to see how these changes could affect your home ownership planning and please keep in mind that I’m always available to serve you and others with financing needs.

For more helpful resources visit BayAreaHomeBuyersInfo.com!

5 Things to Think About When Looking for Your Dream Home-Bay Area Real Estate

While on the hunt for a perfect home, it can be immensely helpful to create a wish list of sorts. This can help you and your real estate agent obtain a clear picture of what type of home would best suit you.

Some things to consider:

1. Move-in ready or fixer-upper?

Making a home “your own” can make fixer-uppers an attractive option, along with the lower cost. Making a mark on your new home via renovations. Take some time to think about what homeownership means to you, and whether you are interested in renovation.

2. Upgrades

Certain upgrades in a home, such as marble or granite counters, are often coveted by buyers. Consider what type of upgrades are important to you – energy-efficiency, professional grade appliances, luxury tiling? Make a list and show your Realtor.

3. The Yard
What type of backyard are you looking for, and how important is it to you? Think about low versus high maintenance yards, the amount of space you’d like, and what kind of yard would best suit your lifestyle.

4. Swimming Pools
For some homebuyers, having a swimming pool can be a dealbreaker. If this is something that you really desire in your dream home, make that clear to your real estate agent so that they can narrow the search for you.

5. Schools in the Area
Last but certainly not least, the quality of the schools in the area of a dream home should be an important thing to research. Ask your Realtor for information about schools in the area of your search, and comparisons between them. This information is easily obtained, and real estate agents will be more than happy to show you school scores and more. Also consider private schools, if that is an option for your family.

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

For more helpful resources visit BayAreaHomeBuyersInfo.com!