Paying more for your house payment does not make your home more valuable. It does mean that the mortgage rate may be higher than it has to be.

Even though fixed rates may never again be as low as they are currently, an adjustable rate mortgage may provide the lowest cost of ownership depending on how long a borrower plans to own a home. There are different types of ARMs but the one in this example is a 30 year mortgage with the rate fixed for five years and can adjust every one year after that based on independent indexes.

Another feature of an FHA ARM is the maximum rate change in one period is 1% and the maximum lifetime cap is 5% over the initial rate.

In the example below, the payment on the adjustable rate loan is $153.48 lower for the first five years or 60 payments. Another interesting thing is that lower interest rate loans amortize faster than higher interest rate loans. In this example, the ARM has a lower unpaid balance at the end of the first five years by $4,239.

The total savings on the ARM at the end of the first period is $13,477. If a borrower felt confident they would sell the home prior to the breakeven point of 8.5 years, the ARM would produce a lower cost of housing even if the mortgage rate escalated the maximum at each adjustment period.

To help determine whether you pay more or less, consult with a trusted mortgage professional and your real estate agent to learn the advantages and disadvantages of different programs. To try your own comparison, check today’s rates at the Freddie Mac Mortgage Rate Survey and plug your numbers into an​​ Equity Accelerator.

Many times, young adults feel “bullet-proof” and don’t consider the urgency to get involved or spend the money to take care of certain legal aspects of their lives because they think they’re going to live forever.  Since no one is guaranteed longevity of life, if you want to be in control of who gets what and who is in charge now based on an untimely incapacitation or death, it is important to investigate these basic legal documents. 

Will – This is a legal instrument that specifies your desires to care for your minor children and to distribute your personal property after you die and who will manage the process.  Anyone who has property and minor children needs a will.

Living Will – This legal instrument specifies your intentions regarding end of life decisions or to designate an individual to make those decisions on your behalf.  Many times, a person who had been diagnosed with a terminal condition or who is facing a serious surgery or hospitalization might feel a sense of urgency to have this document.

Power of attorney – This document allows you to appoint someone you trust, not necessarily an attorney, to handle important legal and financial matters for you if you are unable to make decisions for yourself.  The time limit can be for a specified period of time or indefinitely.

Trust – This arrangement involves an entity called a Trustee who takes control and manages property for someone else’s benefit called a beneficiary.  When property is placed in a trust, the trust becomes the owner of the property.  There are different types of trusts and a qualified advisor can explain and recommend which type would be best suited for your situation.

HIPPA Release Form – The Health Insurance Portability and Accountability Act, known as HIPPA, was created by Congress to protect the privacy of a person’s health information.  Health care providers are prohibited from discussing any aspect of your medical information with anyone who is not directly involved in your care.  To allow friends or family who do not have legal responsibility for you to have access to this information, this release form is necessary.

Most of the issues affecting these types of documents are determined by state law.  Since they are legal documents, it is recommended that you seek sound financial and legal advice.

Fannie Mae just launched a new program designed to help out first time home buyers called the "HomePath Ready Buyer Program."  Upon completion of the program, eligible buyers can receive up to 3% of the purchase price in closing cost assistance from Fannie Mae and the $75 cost for the course can be reimbursed. On a $200,000 home, that can amount to $6,000 worth of savings!  For more information, please check out the flyer below and give us a call!

For whatever reason you’ve delayed buying a home, it may be time to reconsider that decision based on today’s conditions and what is expected to happen in the future.

Rents are continuing to increase to the point that in most markets, it is significantly less expensive to own than to rent.  Even after you factor repairs into the equation, the low interest rates, principal accumulation due to amortization, appreciation, and tax savings lower the monthly cost of housing.

Low inventories coupled with strong demand cause a rising effect on prices.  Another reason for higher values is that builders, especially in certain price ranges, have not ramped up new home starts to keep up with the demand.

Recently, the Federal Reserve announced that they intend to start raising rates.  Most experts agree that higher interest rates are a foregone conclusion; it is just a matter of when it will happen.

A $300,000 home today could cost considerably more one year from now.  With a 20% down payment, if prices go up by 3% and the interest rates increase by .5%, the principal and interest payment at 3.625% would be $1,094.52 for 30 years compared to $1,198.05 at 4.125%.

The question is not necessarily “can you afford the additional $103.53 more per month that you’d have to pay for the home during the 30 year term?”  More importantly, “How would you feel about having to pay more because you weren’t ready to make a decision and what would you have spent it on if you didn’t have to pay a higher payment?”

There are many factors that affect your FICO® credit score.  The law is specific about what may and may not be considered in a credit score.  The factors that make up your FICO® credit score are:

·       Payment History

·       Amounts Owed

·       Length of Credit History

·       New Credit

·       Types of credit used


The most common credit score is the FICO® score.  This score ranges from 300-850.  The higher scores indicate a low risk that the borrower will not pay the loan back and a lower score indicates a higher risk.  Here are a few tips to help you improve your credit score:

1. Pay your bills on time. This is the most important thing you can do to maintain and/or improve your credit score.
2. Pay down credit card bills.  It’s best to pay off the entire balance every month.  If this isn’t possible, keeping your balances less than 30% of your credit limit is optimal.
3. Apply for new credit with caution.  The more you apply for new credit, the more debt you appear to be taking on.  Also, don’t open new credit card accounts before applying for a mortgage.  Having too much available credit can lower your score.
4. Don’t charge your credit cards to the maximum limit.  The closer you charge to your credit limits, the lower your score will be.
5. Shop for mortgage rates all at once.  If you focus your mortgage shopping during a specific period of time, multiple inquiries from the same type of lender may be counted as one inquiry.  So you avoid having your score lowered by having too many credit applications.
6. Keep a close eye on your credit report.  It is recommended to request and check your own credit report and this won’t affect your score as long as you order your credit report directly from the credit reporting agency.   Go to www.AnnualCreditReport.com. Check for and correct any errors in your credit report by working with a professional lender.

If you’ve had difficulties with your credit, you should work with a professional lender or credit expert to help guide you in what is needed to improve your score so that in the future you can successfully obtain a mortgage. 

Having a limited credit history can have a negative effect on your score.  If you don’t have any and/or a limited credit history, consider opening an account and use it responsibly.

Home design is always changing. What may have seemed brilliant a few years ago can quickly fall out of style and leave you wondering, “What were we thinking?” But our homes reflect our habits and hobbies, and the newest trends reflect a new kind of home owner.

Re-thinking the kitchen
Food doesn’t just come from the grocery store anymore. Many homeowners grow food in their gardens and have taken to canning their produce. New kitchen designs often include added space for storing vegetables from your garden and your canning equipment. High-temperature cooking options, induction ovens, and com- bination ovens are also becoming more and more popular.

Be cautious about the connected home
The new technology for controlling your HVAC system, home entertainment system, and other electronic features is con- venient, but it does come with some risk. Technology moves extremely fast, and what once seemed cutting edge can quickly be abandoned by the manufacturer, leaving you without many options for updates, maintenance, and replacements. Be sure to do your research.

Gray is anything but dull
Cool shades of gray are an extremely popular choice for interiors. Other popular paint colors in newer homes include chocolate brown, teal, and yellow. Try something new and see how it upgrades your space. 

After you take the training wheels off your bike and learn to ride it, you would never consider putting them back on again.  Similarly, once you’ve owned a home, you might think you’ll own a home from now on but there may be some situations where it might make sense to rent again. 

Big shifts in a person’s life like a divorce, death of a spouse, empty nesting, or a temporary transfer to a new city are certainly things that may warrant renting, at least temporarily, until those circumstances develop the particulars.

A good example might be that you think you’d like to move downtown.  Before selling your home and purchasing a condo, it might be enlightening to rent an apartment to see how you’ll adapt to the changes in that style of living.

The sales and purchase expenses incurred with real estate are absorbed over the period of ownership which is usually between ten and twelve years.  When the holding period involves only a few years, it can negatively impact a homeowner’s equity. 

Like any move, especially coordinating the sale and purchase of two homes, there are a lot of issues involved.  Your real estate professional can provide information that will help you to make better decisions on whether to buy, sell or rent again.