<a href="http://jbuff.housingtrendsenewsletter.com?Newsletter_ID=296">http://jbuff.housingtrendsenewsletter.com?Newsletter_ID=296</a>

 Check to see if your home or the home you are thinking about purchasing is in a flood zone at....

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1.  The First Sight. Appraisers can hack off hundreds, even thousands, of dollars from your home’s value just for having an unkempt yard.
2. Small Subliminals. Palmisano said you don’t have to redo the entire kitchen. Adding a new faucet can be considered an update and it adds value.
3. Address the mess. Clutter isn’t just an eyesore; it costs money too. Experts say a clean, clutter-free house can appraise 10 percent higher than the exact same messy home.
4. Out With the Old, In With the New. Palmisano said an old TV can make an entire room look dated.
5. The Naked Truth. Palmisano said carpet on top of carpet will read like there’s a stain. You don’t want to give the appraiser the impression that you’re hiding something.
6. Remove Excess Furniture. Maximize your space and how it’s perceived. The less furniture you have in a room, the larger the space looks.
7. Everything in Your Home Should Work. If something doesn’t work properly, replace it, fix it or remove it. When people come to see your home — buyers and appraisers — it can be hands on. If there is a knob that is broken or loose, fix it.
8. Show Property in Best Light. If there is a feature in your home that is special, point it out. Keep the door open to a phenomenal closet before the appraiser comes.
   
   By:Alice Palmisano, the executive director of Brown Harris Stevens Appraisal and Consulting

 

 

Why pay extra toward mortgage principal?

Dear Dr. Don,
My question deals with the wisdom of paying your mortgage principal early. If you have a fixed-rate mortgage, with its associated amortization schedule, can't you achieve a significantly higher "return" by making additional principal payments at the top end of the amortization schedule? For example, say your mortgage payment is $1,000, comprised of $100 toward the principal and $900 in interest. If you paid that $1,000, and then added another $100 toward next month's principal, wouldn't you save the $900 interest for next month?
Thanks,
-- Wendell Winnow

Dear Wendell,
There are many reasons why people pay off a mortgage early. They may want to be debt-free, for example. They may want the house paid off before retirement.

From a strictly financial point of view, you will want to pay down or pay off the mortgage if you expect the after-tax returns on your investments to be less than the effective rate on your mortgage. The effective rate includes any realized tax benefits from the mortgage interest deduction. A mortgage with a stated rate of 4.5 percent might have an effective rate in the mid threes depending on your tax bracket and your ability to fully utilize the deduction.

Now, to your question: I'm not sure if you've thought that plan through. Your interest payments are based on your outstanding loan balance, not on your monthly principal payment. If you pay next month's principal payment, you will save a little interest, but not that much because your overall balance hasn't been reduced by that much.

If the mortgage interest rate is 4.5 percent, a month's worth of interest on a $100 prepayment of principal is 37.5 cents. No pot of gold at the end of that rainbow.

However, if you keep making additional principal payments every month, you can significantly reduce your interest payments over time. For example, if you pay an additional $100 to your principal every month, it'll reduce the interest and loan term as shown below.

The mortgage magic in prepaying your mortgage isn't in reducing intramonth interest expense. It comes from paying down your outstanding loan balance with additional principal payments.

Read more: http://www.bankrate.com/finance/mortgages/pay-extra-toward-mortgage-principal.aspx#ixzz2MJIXlgbl

 If you're considering moving to Houston and would like free relocation package, please call Janet at RE/MAX 281-414-1811
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Welcome to the most current Housing Trends eNewsletter. This eNewsletter is specially designed for you, with national and local housing information that you may find useful whether you’re in the market for a home, thinking about selling your home, or just interested in homeowner issues in general.

Please click on this link to view the Housing Trends JANUARY - 2013 Newsletter http://jbuff.housingtrendsenewsletter.com

The Housing Trends eNewsletter contains the latest information from the National Association of REALTORS®, the U.S. Census Bureau, Realtor.org reports and other sources.

Housing Trends eNewsletter is filled with local and national real estate sales and price activity provided by MLSs and the National Association of Realtors, U.S. Census Bureau key market indicators, consumer videos, blogs, real estate glossary, mortgage rates and calculators, consumer articles, and REALTOR.com local community reports.

If you are interested in determining the value of your home, click the “Home Evaluator” link for a free evaluation report:

http://jbuff.housingtrendsenewsletter.com/dispContent.cfm?loadid=2&loadtype=0

Sound decisions can only be made with accurate and reliable information, and I am happy to be a trusted resource for you. Thank you for the opportunity to provide you with this monthly eNewsletter, and I look forward to answering any questions you may have and to the opportunity to be your REALTOR® in the future.

Sincerely yours,

Janet Buff
RE/MAX Pearland
10015 W.Broadway,Suite B Pearland TX 77584 -- 281-414-1811JanetBuff@Remax.net

 

Personal Finance News: How to Avoid Down-Payment Gift Pitfalls

In today’s real estate market, one of the hardest parts of buying a house is getting your hands on that hefty down payment. While there are still some programs that allow for three or five percent down, many lenders are requiring consumers that have good credit to put down 10 or even 20 percent. As a result, more and more first-time buyers are resorting to gifts and personal, family-to-family loans in order to get their hands on a home of their very own. If you have in-laws, parents, or other relatives who are willing to put $20,000 or $30,000 (or more) on the line in order to help you get your own home, consider yourself lucky! Then, do a little bit of homework to make sure that the very gift that is supposed to put you in a home doesn’t keep you out of it.

For starters, make sure that money is traceable to its origins. Do not take a cash gift and deposit it in your account because cash gifts often make lenders feel leery about the source of the money. Instead, ask for the gift in the form of a check or wire transfer so that the lender knows that you did not steal or launder the windfall. Also, get your gift in advance. If you have $100 in your account one day and $50,100 the next, a lender is still going to feel very nervous about giving you a loan. If the money has been in your possession for several months, it will raise fewer red flags.

Document the amount of the gift. This is important for tax reasons since gifts in excess of $13,000 must be reported to the IRS and can be taxed, but also because some lenders will not allow you to make your entire down payment using gift money. You need to be able to show what portion of your down payment came from your loving family and what portion you contributed yourself.

Make sure that the giver is “eligible” to give you a down payment. It sounds crazy, but some lenders also are not okay with “rich uncles” or best friends giving you money to buy a house. In fact, they won’t let you use that money in some circumstances. Gifts and loans from friends, colleagues, second cousins, and business associates generally will stop a home purchase dead in its tracks.

Worried that your gift down payment will actually keep you out of your home sweet home? Don’t be distressed. Get all the information that you can about your lender’s regulations on down payments before you actually apply for the loan and work with a financial planner and finance professional to establish a scenario in which you are optimally likely to be approved for your home loan. Lenders want to loan you money, they just want to be very sure these days that they will get a good return on their investment. It is your job to make sure that your borrowing and home-buying profiles make you look like a sure thing.

Have you ever bought a home with gift money?

Thank you for reading the Bryan Ellis Investing Letter!

 

Congress Extends the Mortgage Debt Relief Act

If you thought that you were going to have to give up on your hopes for a short sale in 2013 due to staggering tax liabilities associated with mortgage debt forgiveness, think again. Congress’ fiscal cliff bill accomplished many tax hikes, but it also extended one form of tax relief in the form of an extension of 2007’s Mortgage Debt Relief Act. The legislation was due to expire on December 31, 2012, but will now expire on December 31, 2013. The act forgives tax liabilities on forgiven mortgage debt accrued via short sales and loan modifications[1]. If the act had not been extended, borrowers who received short sales or loan modifications would have been liable for taxation on what would, on paper, appear to be “windfalls” of multiple thousands of dollars, depending on the terms of their short sale or mortgage adjustment.

Real estate professionals and many homeowners breathed a sigh of relief when the act was extended. One Las Vegas agent reported that many of his sellers had already decided to abandon their short sales and embrace foreclosure if the legislation did not pass in a timely fashion. Short sales account for nearly half (45 percent) of all home sales in Las Vegas at this time[2].

Do you think the extension of the Mortgage Debt Relief Act is a good thing for the market?

Thank you for reading the Bryan Ellis Investing Letter!

How can I time a home sale and purchase?

Answer:
The "cement" is still wet until the closing ink is dry -- and the sale has cleared escrow. When that occurs, funds are typically accessible immediately, although closings over weekends and holidays have been known to delay paperwork and funding for a day or two.

By the way, the funds will be disbursed via a method designated by you, the seller, on the listing contract. Your options include a cashier's check, a trust account check from the closing company or a wire transfer to your account. That sum will be for your remaining equity in the home, of course, after all expenses and fees have been deducted.

As for the pending purchase of your next home, you can try adding a contingency to your purchase contract saying you won't close on the deal until you first sell your existing home. That tactic is more acceptable to sellers in a depressed home-sales market with few competitive bids than in a hot market. But if there's pressure from other bidders and you must act quickly to avoid losing the house to another buyer, there are ways to come up with a down payment without the funds from your sale.

But I must add that it's much safer to first secure the sale of your existing home because it's always the biggest "if" in the sell-buy scenario. The worst that could happen there is you'd be temporarily "homeless," taking up residence in a hotel, apartment or at a relative's home until you complete the purchase of the replacement home. Buying the new home first, on the other hand, could put you on the spot for paying dual mortgages much longer than you originally bargained for, particularly if your "sure thing" buyers suddenly can't qualify for a mortgage, or they find a way to break your contract to pursue a better deal -- scenarios that are all too common.

But if you truly need to buy the new home first, you could request a "rent-back" from your buyer. That's where you remain in the house temporarily and pay a monthly rent to the buyers that's roughly equivalent to their new mortgage payment, plus insurance, interest and taxes. That way you pack and move only once. Failing that, you could try to arrange a bridge loan, also called a "swing loan," to use as the down payment on your replacement home. However, these loans tend to carry strict qualification guidelines and can be much more costly than your standard equity loan, plus they're tough to get these days. Another solution is getting a home equity line of credit, or HELOC, to make your down payment. These typically run a point or two cheaper than bridge loans and don't require payment of any closing fees.

Good luck! Here's hoping your dual transaction comes off flawlessly.

By: Bankrate.com

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