Classic Properties REALTORS ®



Posted by Classic Properties REALTORS ® on 2/11/2018

There are so many factors that go into finding and securing the financing to buy a home.   While lenders require quite a bit of information for you to get a loan, you still need to be aware of your own financial picture. Even if you’re pre-approved for a certain amount of money to buy a home, you still need to dig into your finances a bit deeper than a lender would. The bottom line is that you can't rely solely on a lender to tell you how much you can afford for a monthly payment on a home. Even if you’re approved to borrow the maximum amount of money for your finances to buy a home, it doesn’t mean that you actually should use that amount. There are so many other real world things that you need to consider outside of the basic numbers that are plugged into a mortgage formula.   


Run Your Own Numbers


It’s important to sit down and do your own budget when you’re getting ready to buy a home. You have plenty of monthly expenses including student loan debt, car payments, utility bills, and more. Don’t forget that you need to eat too! Think about what your lifestyle is like. How much do you spend on food? Do you go out to the movies often or spend a regular amount of cash on clothing? Even if you plan to make adjustments to these habits when buying a home, you’ll want to think honestly about all of your needs and spending habits before signing on to buy a home. 


Now, you’ll know what your true monthly costs are. Be sure to include things like home insurance, property taxes, monthly utilities, and any other personal monthly expenses in this budget. If you plan to put down a lower amount on the home, you’ll also need to include additional insurance costs like private mortgage insurance (PMI).


The magic number that you should remember when it comes to housing costs is 30%. This is the percentage of your monthly income that you should plan to spend on housing. Realistically, this could make your budget tight so this is often thought of as a maximum percentage. By law, a lender can’t approve a mortgage that would take up more than 35% of your monthly income. Some lenders have even stricter requirements such as not allowing a borrower to have a mortgage that would be more than 28% of monthly income. This is where the debt-to-income ratio comes into play.


As you can see, it’s important to take an earnest look at your finances to avoid larger money issues when you buy a home.  





Categories: Buying a Home   budgeting  


Posted by Classic Properties REALTORS ® on 9/13/2015

In today's economic climate protecting your financial health is more important than ever. From health insurance to your plans for retirement, there’s a lot to consider. Here are some tips to help protect your assets and financial future. It is never too early to plan. In order to plan, you need to know what you have. Review your pension plan, 401 (k), IRAs, Social Security benefits and other savings plans to assess whether they meet your long-term retirement goals and will generate an income stream to meet your projected expenses. Curb spending. Time to take an inventory on how much you spend. Keep a log on trips to the market, afternoon lattes, dry cleaning and all of your miscellaneous spending. Try to eliminate a portion of these expenses. Once you track them you will realize you are spending more than you thought. Re-define your financial goals. Ask yourself where you see yourself in five, 10 or 15 years. See if it possible to redefine your goals. You may be able to retire earlier or pay for college. Set goals to achieve the things you want. Get help. Professional advice about investment losses, financial products, insurance coverage and other important issues will help you make the right choices for your current financial situation.




Categories: Money Saving Tips  


Posted by Classic Properties REALTORS ® on 4/1/2012

In today's economic climate protecting your financial health is more important than ever. From health insurance to your plans for retirement, there’s a lot to consider. Here are some tips from Family Wealth Management Group, LLC to help protect your assets and financial future. It is never too early to plan In order to plan, you need to know what you have. Review your pension plan, 401 (k), IRAs, Social Security benefits and other savings plans to assess whether they meet your long-term retirement goals and will generate an income stream to meet your projected expenses. Curb spending Time to take an inventory on how much you spend. Keep a log on trips to the market, afternoon lattes, dry cleaning and all of your miscellaneous spending. Try to eliminate a portion of these expenses. Once you track them you will realize you are spending more than you thought. Re-define your financial goals Ask yourself where you see yourself in five, 10 or 15 years. See if it is possible to redefine your goals. You may be able to retire earlier or pay for college. Set goals to achieve the things you want. Get help Professional advice about investment losses, financial products, insurance coverage and other important issues will help you make the right choices for your current financial situation.




Categories: Money Saving Tips  


Posted by Classic Properties REALTORS ® on 3/11/2012

While go-go lending is partly to blame for the economy's current financial troubles, ironically, borrowing money may help ease the country out of the downturn. At least that's the thinking behind the Federal Reserve's recent pledge to keep low interest rates into 2013. This article from Bankrate.com will show you the smartest money moves to make while the rates are still low. While this move has not triggered an uptick in consumer confidence, experts agree money probably won't get any cheaper to borrow than it is right now. Average rates for 30-year fixed-rate mortgages, home equity loans and even 60-month new-car loans are hovering around 4.2 percent, 6.6 percent and 5.2 percent, respectively, according to Bankrate's most recent weekly survey of interest rates. If you have a good-to-excellent credit score and not a lot of debt, you may want to consider ways to take advantage of these historically low interest rates, says Jessica Cecere, regional president for CredAbility, a nonprofit credit counseling and education agency. "Interest rates are so low that consumers should take advantage of these rates, if they can afford to, to help them save money on planned purchases," Cecere says. So what are some smart borrowing decisions to make while interest rates are low? Here are a few.

1. Buy a home or rental property

Rates on long-term fixed-rate mortgages are at their lowest in decades. If you have been putting off your decision to buy a house, now may be the "perfect storm" of low interest rates and low home prices. Since rates are so low, consider getting a 15-year instead of the traditional 30-year mortgage. "The amount you will save in interest payments over the life of the loan is enormous," says Scott Stratton, the author of "Your Last Five Years: Making the Transition from Work to Retirement." If you already own a home and have some money stashed away for a down payment, now may be a good time to think about buying real estate for passive income, says Greg McFarlane, the author of "Control Your Cash: Making Money Make Sense." Not only are mortgage rates and property values low, but the rash in foreclosures means more people are in need of shelter. "They're called renters, and they're your cash cows," says McFarlane. Not only will you get regular income from renting property, but as a landlord you can take tax breaks in the form of mortgage interest deductions.

2. Refinance your home

If you want to get out from under an adjustable-rate mortgage -- and you aren't upside down on the loan -- now is a good time to switch to a fixed-rate mortgage. Use an online mortgage calculator to figure how much you'll save with the new rate. While you're at it, look into refinancing your 30-year mortgage into a 15-year loan so you don't inadvertently add many years of interest payments to your mortgage. For example, a $225,000 house purchased five years ago with a 30-year loan or mortgage rate of 7% has a monthly payment of around $1,500 a month with about $76,000 worth of interest paid in those five years. If you refinance the balance of that loan now at the current 3.5% interest for 15 years, you'll save almost $175,000 over the life of the loan, plus you'll pay off the home almost 10 years sooner. And your payments will go up only about $25 per month. "Focusing only on monthly payments is penny-wise and pound-foolish in the long run," says Stratton. "Owning a home outright and having no monthly mortgage payment goes a long way. . . . In 15 years, when the house is paid off, it can literally make the difference between being able to retire or not."

3. Buy a car

If you're in the market for a new car, now may be the time to trade in your clunker. Car loans aren't as rock-bottom as mortgage loans, but manufacturers are offering plenty of incentives, such as special financing options. Still, at press time the average 60-month new-car loan was around 5.3%, according to Bankrate's weekly survey, and some car loans were even cheaper. This is where a person with good credit can use that credit as a force multiplier," McFarlane says. "Stretch out your financing dollar for as long a term as possible, especially since inflation can't be postponed forever." If you are still paying off your current car, you may want to consider refinancing the remaining car loan at lower and more favorable interest rates.

4. Give money away

If you are fortunate enough to have money to give away, low interest rates make it easier to be generous and charitable, says Alexey Bulankov, a financial adviser and CFP with McCarthy Asset Management Inc. of Redwood Shores, Calif. "This environment of low rates and poor economic conditions, combined with a massive intergenerational wealth transfer and looming estate, gift and income tax hikes create a once-in-a-lifetime opportunity to give, borrow, move money, be charitable and create a legacy," Bulankov says. Look into strategies such as a charitable lead annuity trust, or CLAT, which combines philanthropic with wealth-shifting goals by allowing the grantor to put money into a trust that pays out to a charity during the life of the grantor. At the end of the grantor's life, the remainder is passed to beneficiaries. CLATs work well in a low-interest-rate environment. If the performance of the investments exceeds the "Section 7520" interest rates -- used to value certain charitable interests in trusts and published monthly by the Internal Revenue Service -- then the excess earnings at the end of the term pass to the beneficiaries tax-free, Bulankov says. "The lower the 7520 rate, the larger the potential gift to the family or heirs," he says.

5. Review investments

While you don't want to spend money in a down economy on investments that are not giving you much in return, you may want to look into ways you can diversify your portfolio and spread the risk, Cecere says. Talk to your financial adviser about alternatives to savings accounts and money market funds, asking for options that earn better returns on your savings. Also, be wary of buying investment vehicles such as bonds when interest rates are low.

6. Lock in student loan rates

Federal student loan rates are usually low, but even they have taken a slight dip in this low-interest environment. If you have more than one student loan outstanding, check with your federal student loan provider on how to consolidate and lock in at a lower interest rate, Cecere says.

7. Pay off credit card debt

While mortgage and car loans have favorable interest rates, the same is not true for borrowing money on your credit card. Work on reducing or eliminating this debt. If you have a choice of putting money into a savings account or paying off debt, pay off the high-interest credit card debt first because financial institutions are paying very little interest in savings accounts. You also may want to negotiate lower interest rates with credit card companies, particularly if you have a good track record with paying on time, Cecere says.
 





Posted by Classic Properties REALTORS ® on 9/18/2011

Paying off your mortgage early and having no bills sounds like a no brainer. The answer however is not so simple. The answer really is; it depends. First you need to ask yourself a few questions. 1. Have you capitalized your employer’s match to your retirement savings? If the answer is no and you are not contributing the maximum than you are throwing away free money. You may want to consider putting your money here before paying down your mortgage. 2. Do you have other debt other than your mortgage? Pay off high interest credit card debit first. It makes no sense to pay off a lower interest loan and carry high interest debt. 3. Do you have an emergency fund? Experts suggest at least a three month supply of living expenses. Some even go as much as twenty four months of living expenses after the turn in the economy and job market. It makes more sense to have money set aside for a sudden loss of income before you pay off your mortgage. 4. Do you owe more than your house is worth? If you are upside down you are more susceptible to foreclosure. Ask yourself how much how much you enjoy living there. Would you be willing to buy it again for more than it is worth now? 5. Do you have life, health and disability insurance? If you are the main source of income in your household what would happen if you were no longer able to make the payments? Putting safety nets in place first is a wise idea. 6. Do you believe you can get better return investing elsewhere? Paying off your mortgage is an investment decision. Ask how does paying off my mortgage stack up with other investment options? 7. Are you thinking of retiring and want to live with the worry of a payment. The thought of living on a fixed income can be scary. Paying off your mortgage may give you peace of mind. There is no right or wrong answer to this question. It really comes down to what is most important to you. Sometimes, the answer is not based just on dollars and sense and more on what works for you, your life, your family situation and just plain old personal preference.




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