Renting vs Buying?

Homes are one of the most costly investments you will make in your lifetime; but it doesn’t have to be that way. You can optimize your living arrangements to better suite your needs and desires. Buying a home can often times be to your advantage, but there are times when it may not be. Therein lies the question… “Should I rent or buy?” Start by asking yourself these questions:

1. How long will I be living there?

• If you plan on staying in a particular location for a long period of time you should consider buying a home.

• If you move often, renting would be more of a benefit to you. You can move when the lease it up; but, when you own a home and have to move, you usually have to sell it. This can take up a lot of time and money.

2. Do I have/want a family?

• One of the many elements of the American Dream is buying a home to start your family. Owning your own home will give you a sense of security and origin. “Putting down roots” will establish you and your family as part of a neighborhood and a community.

• If you’re not looking to start a family or happen to be single, it may not be to your advantage to own your home. Renting will increase your flexibility in these cases. When you are young, a lot can change over a short period of time, and you want to be in a good financial position when these changes occur.

3. Taxes and Equity?

• Taxes are a confusing subject, and when you add home ownership and renting into the mix, it becomes even more confusing. Just to straighten a few things out, it is important to understand that even if the value of your home decreases, over time, the mortgage balance decreases and equity builds. There also tend to be more tax advantages available for homeowners.  Your mortgage payments are tax-deductable under most circumstances. Unfortunately, there are many variable costs to owning a home and it is unarguably a larger financial investment.

• Renting allows for more fixed cost and less obligation. This would be especially beneficial if there are high interest rates or property values are deteriorating in that particular area. However, no matter what happens to the value of your property, you will never gain equity, nor lose. There is also little or no tax advantage to renting. It all goes to your landlord.

4. How strongly do I feel about self-expression and personalization?

• Being able to make changes and renovations to your home to match your needs and personal style is one of the perks to owning your own home. You will have the freedom to change wall colors, add carpet, and even knock out a wall for more space.

• Renting does not usually allow for such versatility. Even if renovations are permitted, you are normally required to return the space back to its original condition.

5. Maintenance?

• If you should decide to rent you can look forward to less work in the form of maintenance. The landlord is usually responsible for maintaining the property with little or no up-front cost to you. This may be a perfect situation for you if you’re single or don’t have the time or money to deal with extensive maintenance issues.

• Owning your home doesn’t offer such a sweet deal. You are responsible for all work needed; whether you hire someone or do it yourself. However, it may be the case that this is not a disadvantage to you at all. Many homeowners take pride in maintaining their homes.



Top Reasons buyers and sellers should work with a Realtor.

One of the most complex and significant financial events in peoples’ lives is the purchase or sale of a home, which is why it is crucial to call upon the expertise of a Real Estate professional. According the National Association of REALTORS®, 84% of homes are sold with the help of a real estate agent and there is a reason why.

• A real estate agent will give you vital negotiation power. Every real estate transaction includes the inevitable negotiations on both sides to come to a final agreement. A real estate professional can help negotiate a sales price, financing, contract terms, closing date, repairs, inspections and more.
• Getting to the closing table. Closing coordination can get complex and chaotic. A real estate agent can help you settle the required paperwork and processes to close. Also to ensure that the title comes back clear, a professional is the best person to help resolve questions and issues surrounding the settlement.
• A real estate agent markets your property properly. Most people don’t realize that how much money agents spend on marketing. Agents have the venues to advertise your property not only to the public but to other agents as well. A real estate agent distributes all listings through the MLS (Multiple Listing Service) to other professionals. A lot of agents market their listings on popular real estate websites, newspapers, and magazines, conduct open houses and use other media. An agent knows how to get the right people to see your home.
• Save Time and Money A real estate agent will help to manage all showings and offers.He or she also will make sure that only qualified buyers come to see your house.
• Setting the right price. One of the first things a real estate agent presents to a seller is comparables based on current market trends and recent sales in a given area.  This is the basis for the agent’s recommended list price. Setting the right price is crucial in home sales because an inflated asking price can turn away buyers. And according to the National Association of REALTORS®, sellers who use a real estate agent receive on average 20 percent more for their homes than those who sell their own homes.
• Help with home inspection coordination. An agent can help to ensure buyers and sellers come to terms on what repairs are needed. Also, an agent knows skilled and qualified contractors to get the work done right and for the right price.
• Getting Preapproved. A real estate agent can help put you in touch with the right mortgage lenders to get you the best rate.
• Neighborhood Demographic Information. Most are knowledgeable about the areas you are looking to buy. They have the right resources to get you the information you need, such as, utilities, zoning, schools and much more.



Fannie Mae's new incentives to short sale instead of foreclosure.

In an effort to help distressed homeowners avoid foreclosure, effective July 2010, troubled homeowners that opt to voluntarily release their homes through a “deed in lieu of foreclosure” or by completing a short sale will now be eligible to apply for another Fannie Mae backed loan in two years.

In 2008, the waiting period was reduced from five years to four and now is at two. After that two year period, to qualify, a minimum 20% down payment will be required unless there are “extenuating circumstances” such as job loss, according to The Wall Street Journal.

Doesn’t this encourage people to walk away?

Critics of the move call this an encouragement for homeowners to walk away from their homes, putting the real estate sector back in jeopardy similarly to the continuing subprime crisis.

“We don’t want to say that there’s a ‘get out of jail’ card during recessions to walk away from your house,” FHA Commissioner David Stevens told the Wall Street Journal. “We are beginning to think about post-recession, how you address borrowers who became unemployed through no fault of their own … and now deserve the right to re-enter the housing-finance system.”

Fannie Mae counterpart, Freddie Mac still requires a four year wait, but if the Fannie Mae program is successful in curbing foreclosures, perhaps Freddie Mac will follow suit.

Will the Home Buyer's Tax Credit be Extended?

It’s that time of year again: time for lobbyists to convince Congress to extend the home buyer tax credit.

The National Association of Realtors and other industry groups are beginning to make the rounds on Capitol Hill to press their case, which goes something like this: We know you’ve extended the tax credit two times already, but the housing market is still fragile, the tax credit is working, and don’t forget– you’re up for re-election soon. In other words, do you really want to own the next leg down in home prices?

They’ll also make their case by reminding pols that a series of other market supports are being removed, the largest of which is the Federal Reserve’s purchases of $1.25 trillion in mortgage-backed securities that expires next month and has pushed mortgage rates to postwar lows for much of the past year. The Federal Housing Administration is also under pressure to pull back its lending, and more foreclosures could add to the housing inventory as borrowers fail to qualify for modifications.

Industry groups are also pushing the argument that the credit should be extended because it’s taking so long for banks to approve short sales, where lenders agree to a sale for less than the value of the mortgage.

To recap, Congress first passed a $7,500 tax credit in 2008 for first-time buyers, but that credit had to be repaid over 15 years. When it expired one year ago, Congress extended it, expanded it to $8,000, and said it wouldn’t have to be paid back. Just before that credit was to expire last December, Congress extended it again, until April 30 (sales contracts signed by April 30 have until June 30 to close). A new credit of $6,500 was created for current home-buyers. “There’s nothing more permanent in Washington than a temporary tax credit,” jokes Howard Glaser, a housing-industry consultant.

This time, the lobbyists certainly have their work cut out for them. For one, industry groups last time swore that the last tax credit extension would be, well, the last extension. To secure the deal, the lawmaker who shepherded that effort through Congress, Sen. Johnny Isakson (R., Ga.), made clear at the time that extending it again would be a nonstarter. (His spokeswoman says that he has no plans to offer any legislation extending the credit. “Part of the benefit of the tax credit is the urgency of it sunsetting,” said spokeswoman Sheridan Watson.)

Economists mostly agree that the tax credit has helped to goose demand and sell more homes, though there’s still considerable debate over just how many homes would have sold anyway.

Mark Zandi, chief economist at Moody’s Economy.com, pushed to extend the tax credit last fall but says now it’s time to let it expire. “It’s worn out its benefit,” he says. “If you extend it again, it isn’t going to do much, and what you’re doing is providing a tax break to folks who bought anyway.”

While there’s still about 10 weeks before the current tax credit expires, that doesn’t leave much time for buyers looking to cash-in, notes Keith Gumbinger of HSH.com, a financial publisher. Home sales surged last October when it looked like the tax credit might expire for good, and then plunged in December, once it the credit had been extended.

(from the Wall Street Journal)

It's Pays to Shop Around for a Mortgage.

If you're thinking about buying your first home or selling your old one and buying a new one, you will be looking around at what sort of deal you might be able to get on your mortgage whether you are looking for a jumbo loan, a thirty year fixed rate mortgage or if you're looking at refinancing, it's well worth taking the time to shop around.

No matter what you're looking for you should shop around, but this is never truer than when you are looking for a mortgage. There are all kinds of mortgages and refinancing deals, but you need to look for the mortgage that will suit your budget and your needs.

One of the main reasons that people look at refinancing their mortgage is to try and lower the interest rates, have more time to pay and even to pay off debts. It can be a risk to refinance your mortgage, which is a loan given against the collateral of your home, to pay off other, unsecured debts, but this risk is lower if you can get your refinancing at a fixed rather than a variable rate.

A fixed rate mortgage generally means that whatever rate is fixed when you take out the mortgage or the refinancing loan, it will stay that way for the duration of the loan. A variable rate loan or mortgage however, can go up or down as market dictates and if it goes up too high you may have trouble keeping up with the payments.

You should never take the first mortgage or refinancing deal that you're offered. Look around and compare the rates and the conditions of the loans before you settle on one. You always need to bear in mind where you might be a few years down the line and whether you will still be able to keep up the payments on your loan.

If you're buying a home, it's worth looking at mortgages where you don't have to pay the closing costs because they are included in the deal. When a loan also covers your closing costs it can save you a considerable amount of money at the beginning of your loan period.

 You should always shop around when you're looking for any kind of loan but especially if it's a secured loan such as a mortgage or a refinancing loan. It may take you some time to find the kind of mortgage or refinancing loan that you are looking for, but it's time that will, in the end, pay off.

Below are some rates I recently received from a local lender:

                FIXED RATES                                                                 

                        1 Point                   0 Point 

30 Year           4.750%           4.865%

20 Year           4.500%           4.625%

15 Year           4.125%           4.250%

It is unbelievable you can get a mortgage below 5%. Everyone should be buying!