Month: May 2017

If you aren’t familiar with options for financing, it is never too late to get started.  Understanding the different terms and having the ability to relate them to each other will help you to avoid situations that are not financially possible.  One of the terms that you should know is balloons.  This can either help you financially or cause you problems.  Understanding the details of how balloons work and using them to your advantage will give you the ability to pop into the right loan.  

Balloons are used as ways to lower monthly payments.  It does this by consolidating a specific percentage of your loan each month.  At the end of your entire loan, you will pay the additional percentage that is left.  Usually, this will equal about fifty percent of the loan you have.  

You can work with balloons to your advantage if you have the right finances in place.  If you know that you will have a large amount of money at the end of your loan term, then having a balloon can help you to save now and build your credibility with financial investments later.  

If you aren’t certain of your financial status and what it will be in ten years, then a balloon will most likely not help you.  Because you will be expecting to pay a large amount at the end, it can lead to debt and won’t help you to make an investment in another house in the future.  In relation to this, if you are making a specific amount now but know that you will be making more later, then you can use a balloon in order to stabilize your financial conditions.  

By using a balloon, you will be put into a situation where your mortgage will blow up to twice as much at the end of the term.  This can be an advantage or a disadvantage, depending on your situation.  By knowing exactly how to tie the end of the balloon, you will be able to find the best financial options for your situation.

There are many reasons why you may have decided to purchase a home – a growing family that needs more space, you’re tired of paying rent and want to invest your money and you’d like to get the tax breaks that homeowner’s enjoy. Those are just a few.

Don’t simply compare what you’re paying in rent to what you’d be paying with a low interest mortgage payment. Even though it can be an asset for the future, you may not be ready financially to make the commitment.

The pros in homeownership highly recommend that you have a down payment of at least 10 to 20 percent and have an emergency fund socked away that can get you through 3 to 6 months of bill payments.

There are also other points to consider when deciding whether to rent or buy. Buying a home is touted as ‘smart’ and renting as ‘dumb’ but that’s not always the case. Purchasing a home can be a good decision, but some experts believe that it’s a bad financial decision and that the idea of home ownership is overrated.

Some things to consider when deciding whether to rent or buy include the fact that when you pay off your mortgage the home belongs to you. If your home has appreciated more than the taxes, mortgage and interest you’ve paid in – you’ve earned a return or simply break even.

Keep in mind that owning a home also qualifies you for tax credits that can offset some of the costs. But, even though you may own your house outright, you’ll still pay a significant amount of taxes and interest.

You should also realize that renting isn’t exactly “throwing your money away.” You get a place to live and you don’t have to pay for issues such as repairs and maintenance. So, rather than make a decision on what the headlines are saying about home ownership being the best route, you should consider your current situation.

Figure it out by researching the pros and cons of homeownership, crunching numbers and taking a long, hard look at your finances and lifestyle. You may be moving from place to place in your career and don’t need the hassle of putting your house on the market every year or so.

Consider the cost of housing in your area. Houses may be too expensive for your pocketbook right now, so it could be better to rent. But, renting may also be expensive and owning a home might be the better option.

Can you get more of a return on a home investment or by investing your money in the stock market or other methods of investing? All of these caveats must be considered before you should make a final decision on whether to buy or rent.

Your situation isn’t like others and you need to think about where you want to live, what type of house and environment you’re looking for and how it will all pan out in the future. In the end, know that sometimes it’s best to rent rather than buy – it all boils down to what feels right to you.

It’s great to see the housing market recover after a big letdown and enjoy the hot new market. But, with the recovery comes a tight supply of homes, multiple offers – and bidding wars. Knowing a few tricks of the real estate trade can help you emerge with the best bid and be the winner in a bidding war. For one, you should try to be the first offer – but don’t insult the seller with a lowball offer – especially with so few listings on the market today.

Bid at the asking price or only slightly below. The seller will know you’re a serious bidder with that type of beginning. One trick of the trade that really works is to add an escalation clause to the bid. For example, if the price of the home is $500,000 and you think it might rise as high as to $550,000, add a clause that says you will go as high as $560,000 (if that’s true and you really want the home).

The clause should state that the seller can only raise the winning bid to just above the competing offers. For example, if the bids on the home only go as high as $530,000 you won’t be expected to pay $560,000 but only slightly above the highest bidder.

Another little known way to make your bid count is to send the seller a letter (possibly through your real estate agent). Tell the seller how much you love the home and mention something about the home that you particularly like and how your family will enjoy and take care of the home. Plan to spend as much cash as you on the down payment and be sure to get approved for a loan ahead of time to close. Mortgage lenders suspect loans that aren’t a sure thing and bringing cash to the table makes a difference. Go in armed with a pre-inspection. The few hundred dollars it will cost is well worth the time and money. And the seller will know that you’re serious about wanting the home. Have the pre-inspection performed before making an offer on the house.

Your real estate agent can be a huge asset in a bidding war. She can let the seller know that you’re completely enamored with the house and be specific about what you like about it. Chances are, the seller will appreciate that you noticed the touches he was responsible for.

Finally, be smart during a bidding war. Compare the most recent comps and research the market before getting into a bidding war and don’t let your emotional attachment to the house empty your wallet.

It’s easy to overpay when you get caught up in the emotions of a bidding war, but remember there’s always another house that you’ll love and enjoy. Too many buyers get caught up in the emotional aspect of purchasing a home and go overboard in a bidding war. Most regret it later on.