Paying Down Your Mortgage (Free Advice from a Lender)

If there is one question I get from current home owners the most, it would be 'What is the best way to pay down my mortgage?'. With all the choices, it can be a tough decision. I spoke with one of my preferred lenders, Mark Olson on the subject and he told me this.

We all want to save money. The obvious way is to just spend less. But sometimes you can only sustain the super-frugal lifestyle for so long before your family revolts. Your mortgage can offer you a less painful and somewhat subtler way to achieve your long-term savings goals.

Making additional monthly principal payments on your mortgage is one of the best ways to save money over the long term. Let’s look at an example, a $100,000 30 year fixed-rate loan at 5.5%:

The monthly principal and interest payment on this loan is $567.79 and as a 30 year loan it would pay off completely in 360 months. If the homeowner paid just $100 per month toward principal reduction, the loan would instead pay off in 254 months. The extra costs would therefore be 254 times $100 or $25,400. The savings however would be 106 months times the $567.79 or $60,185.74. That is a savings or almost $35,000. An extra $200 per month yields even bigger savings. The loan would pay off in 199 months and the total savings would be over $51,614.

It’s not hard to see that a larger loan balance with larger monthly (additional) principal reducing payments will lead to even bigger savings. So if you want to save more money, long-term for retirement or college funds, then look no further than your mortgage.

If you are going to purchase or refinance a home or if you have questions about your mortgage or financial matters, you can contact Mark Olson at Fairway Mortgage. His number is 972-899-5153 and his email address is marko@fairwaymc.com.

Taxing Texas home owners...VOTE NO to Prop. 2 and 3

On November 3rd, there will be Propositions 1, 2, and 3 allowing the State of Texas to start taxing Residential Homeowners. For homeowners if these laws are passed, you will be taxed by the State. We are already taxed by the County, the City, the Hospitals, and the school districts, we don’t need to be taxed by the state as well. Make sure your voice is heard!
I received a flyer from the Secretary of State, Hope Andrade, listing the Propositions that are up for election in November. I called to question them before sending this message out to my homeowner friends... PLEASE VOTE "NO" to Prop. 2 and 3 (HJR 36), unless you want to pay taxes to the State also.
Proposition 2: The proposed amendment would appear on the ballot as follows: "The constitutional amendment authorizing the legislature to provide for the ad valor em taxation of a residence homestead solely on the basis of the property's value as a residence homestead."
Proposition 3: The proposed amendment would appear on the ballot as follows: The constitutional amendment providing the uniform standards and procedures for the appraisal of property for ad valor em tax purposes."

What are you doing for Christmas?

What happens when you think about Christmas and being in your lovely home on a tree lined street that you just purchased? Celebrating your first wonderful Christmas in your very own home with the décor you put up and the memories you are making in your first home. How does it feel to think about the fact that you will be able to save $8000 on your 2009 tax bill? I know I would love to save $8000 on any bill this year, how about you? You could use the extra money to pay off some bills, take a trip or add some hardwood floors to your new home.
Now what happens when you think about Christmas in that apartment you have been in for the last year always thinking about buying your first home but never making pulling the trigger. None of your own décor, not much room for the big tree you saw on the tree lot. Well my friend time is running out and the $8000 tax credit is set to end on December 1st of this year. You will need to be closed on your new home before that date, if you are not you will not be able to take advantage of the $8000 tax credit. Email me now to find out how you can spend Christmas in your very own home and take advantage of the $8000 tax credit.

As a Buyer: How do you deal with competing offers?

This post refers to standard 'homeowner to homeowner deals, not (REO) bank owned properties--they will more often than not say there are multiple offers when there are none.
You have found the perfect home, crunched the numbers and decided make an offer. But---when your agent submits the offer, you find out that there are multiple offers. At this point, you are told by your agent that the listing agent has told you to submit your highest a best offer.
First things first, you need to take all things into consideration and decide how much you are willing to pay for that home, regardless of how many offers are on the table. It is important not to get caught up in the competition aspect of producing the 'best offer'. Once you have made a decision about how much you are willing to pay for the home, submit that offer and be ready to deal with what happens. Do you’re very best to remove all emotion from your offer. This is a business deal. Treat it as such. You may not get the home because someone else might be willing to pay more for it, but if you get into the bidding war then you will pay more that you normally would have--and it may be more than you can really afford.
On top of increasing the home price, you might also want to consider other options in your offer, including a shorter or longer period before the closing date, paying more in closing costs or taking some issues such as dirty carpets as is. A motivated and agreeable buyer may have better luck than a picky buyer with a higher offer. Many times, getting rid of the hassle is as valuable as the higher price.
Good luck with your home search and remember the next time you hear someone talking about how they would like to sell their home I would really appreciate an introduction. My email is mike@teamtobin.com

How much is my home worth

Here's something you realtor will rarely tell you--the value of your home is not what you want or even what you need. The value of your home is determined by what a typical buyer will pay for it. So you have to ask yourself what the typical buyer will pay for your home, and how you can increase your odds of getting the most money possible for your home.
The first thing you need to do is get a good market analysis of your home. A market analysis is best done by a Realtor or appraiser who really knows the area. If times are tight, most realtors will offer a 'comp' (market comparison) for free. A comp will give you a general idea of the price. To be more accurate, you can hire an appraiser who will give you a solid market analysis for a fee. The fee may seem like a lot but if it gets your home priced right and sold quickly, worth it's weight in gold! An appraiser will come to your home and take the cold hard look at it with zero emotional attachment. After you settle on a selling price for your home you need to make it the best home in the neighborhood, aka “best in class”. You may have some great wall paper that you just love from the 1970’s but it will most likely turn off buyers. Fix everything you can because it will cost you more if you don’t. Always Always Always bring your best house to the market. If you have any question in your mind about this take a drive to your nearest builder model and take a good look at it. Notice that the carpets are clean, walls are freshly painted and the home is decorated. It is their business to sell homes quickly and it should be yours too.

What is the Income Limit for the $8,000 Tax Credit?

Just the other day I was talking with a client and she asked me about the $8000 first time home buyers tax credit. A friend of hers told her that the tax credit for a couple was limited to an income of $75,000. I gently told her that that is not the case, the income limit for a couple filing jointly is $150,000 and the tax credit its self is 10% of the cost of the home. So the purchase price of the home must be $80,000 or more to reach the maximum $8000 tax credit.

The nice thing about the tax credit is that you do not have to pay it back if you stay in the home for 3 years.(If you do sell your home within 3 years of the purchase then the money will be “recaptured” at the time of the sale. )

The last thing she wanted to know was will the program be extended beyond December 1^st of this year. I have not heard a yes or a no on that one and I would not bet either way, my best advice for her is get into a home now and take advantage of this historic offer, and very low rates. If you would like to take advantage of the tax credit then send me an email (mike@teamtobin.com) or check my website for contact information and I will show you how.

How Can I Make My Home Attractive to Buyers?

You've got the sign in the yard and the house is at the perfect price. Buyers are coming! But how do you make them fall in love with your house and call it their home?

First step, clean. Not just made beds and pick up the dishes but clean, clean. Scrub baseboards, clean the cabinets, carpets (get new if very worn--you have no idea what a difference this makes!) and make the home sparkle. Even if your home is a 100 years old, you want it to appear new and fresh to a buyer. You wouldn't buy a dirty car nor would you buy a dirty house.

If possible, look into hiring a cleaning service to do what is called a 'top to bottom' cleaning. Although pricey, the service can add the shine to your home! Speaking of shine, be sure to clean the windows--this will brighten the home and bring in more sunshine.

After you've cleaned, hide or remove most personal items, especially tooth brushes, toiletries, hair brushes and shower items. A buyer will have a tough time feeling at home if she sees your tooth brush and dryer on what she is trying to envision her vanity. I advice clients keep the personal items in a small box under the sink so they will have easy access to the items as needed. Replace the areas with pretty candles (not used), plant life or decorative bowls.

Keep the cabinets tidy. Yes, buyers will look in the medicine cabinet, the closet and the pantry. They are making a decision on buying it--they will want to see each and every inch.

Finally, do the nose test. Have a friend you haven't seen in a while stop by and ask if she can smell anything. You won't notice Fluffy's litter box odor or Fido's dog food smell because it is a constant in your home. A visitor (and buyer) will smell it right off the bat. If possible remove offensive odors or mask with Febreeze or other room refresher (not too heavy!). You might also buy some pre-mixed cookie dough you can bake right before a buyer arrives to fill the home with that delicious smell! I once had a seller who even left out the cookies--it was a hit with buyer and their children.

Keep these things in mind when you put your house on the market and you will have buyers in no time!