Better Homes and Gardens Real Estate Life

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  • What Are Mortgage Points?

    If you are in the market to purchase your first home, you have likely been bombarded with a tremendous amount of information that you need to learn and understand about the home buying process. For most buyers, a mortgage loan must be secured to cover the cost of purchasing the home. Also for most buyers, the financing portion of purchasing a home is typically the most complicated, yet important, aspect of the process. You may have heard the term “mortgage points” used by a lender during discussions about securing a loan. Understanding what mortgage points are will help you get one step closer to finalizing the purchase of your home.

    Mortgage points, also commonly referred to as discount points, are essentially just a way to pre-pay interest on a mortgage loan. When you start shopping around for a lender, one of the most important factors you will consider is the interest rate the lender offers you on the loan. Even half a percent difference in an interest rate can make a significant difference in the amount of money you repay over the lifetime of the loan. One way that a borrower can lower the interest rate charged by the lender is to purchase points. One point is equal to one percent of the loan amount. If, for example, you take out a $200,000 loan you would pay $2,000 for each point. In return for paying for points, the lender will lower your interest rate by a fraction of a percent (usually around 0.125 – 0.250 percent). The idea, therefore, is that by purchasing points upfront at the start of the loan you will be paying less over the life of the loan (as a result of the lower interest rate). A borrower, however, should do the math to ensure that this is actually the case before agreeing to pay points on a loan.

    Mortgage points should also not be confused with an origination fee or origination “points”. The term “origination fee” may be used to refer to a method of buying down the interest rate; however, the term may also refer to one-time fees charged by the lender to set up the loan. In the latter case, your origination fee may be used to pay for lender attorney fees, document preparation fees and the like but will not result in a lowering of the interest rate on your loan.

    As a general rule, the longer a borrower plans to remain in a home the more sense it makes to pay for mortgage points up front because it takes years for the fractional savings provided by purchasing a point to add up to the initial cost of purchasing the point. Consider the following scenarios:

    Scenarios A – You take out a 30 year fixed rate mortgage for $200,000. You decide not to pay points and receive an interest rate of 6.0 percent. Your monthly mortgage payment will be $1,193. After one year you will have paid out $14,316, after ten years — $143,160, and after 30 years — $429,480.

    Scenario B – Same 30 year fixed mortgage but this time you purchase two points at a total cost of $4,000 to you up front. The lender lowers your interest rate to 5.5 percent. Your monthly mortgage payment will be $1,130. After one year you will have paid out $17,560 (monthly payments plus cost of points), after ten years — $139,600, and after 30 years — $410,800.

    Scenario C – Same 30 year fixed rate mortgage but with the purchase of four points at a cost of $8,000. Lender lowers your interest rate to 5.0 percent. Your monthly payment will be $1,069. At the end of year one you will have paid our $20,828, after ten years — $136,280, and at the end of year 30 — $392,840.

    As you can see, purchasing points will save you a considerable amount of money if you plan to remain in the home for long enough to realize the savings. The difference in total out-of-pocket expense between scenario A and C at the end of year ten is less than $7,000 though it climbs to closer to $40,000 by the end of year 30. For this reason, a borrower should take the time to analyze whether purchasing mortgage points is the best way to spend his or her money.

  • Waterfront Homes in Minneapolis

    Minneapolis, Minnesota is known as the “City of Lakes” for a reason. Its twenty lakes and wetlands are spread throughout the area. Along with numerous lakes, the Mississippi River also runs through the middle of Minneapolis as do various creeks and waterfalls, many of which are connected by parkways that make up the Chain of Lakes. Not surprisingly, Minneapolis real estate listings typically include a wide variety of homes on or near a body of water.  If you are looking for a waterfront property for your next home purchase, Minneapolis may be your dream location to live, work and play.

    Along with the neighboring city of St. Paul, Minneapolis makes up a little more than half of the population in the “Twin Cities.” Minneapolis itself is the largest city in Minnesota with a population of around 400,000 people. Together with St. Paul, the Twin Cities metropolitan area is home to over three million people. The City of Minneapolis covers approximately 60 square miles with almost four square miles of that being water (of some sort). If you love the outdoors, Minneapolis offers outdoor recreation all year round. During the warm summer months, kayaking and boating trips down the Mississippi River or one of Minneapolis’s many streams is a popular option as well as an excellent way to see the downtown skyline. Fall in Minneapolis brings with it numerous outdoor festivals as well as the Twin Cities Marathon. Cold temperatures and snow mark the winter months in Minneapolis which make ice skating and ice fishing on one of the many lakes a popular pastime. In the spring, take a walk through the Minneapolis Sculpture Gardens or around one of the many lakes and watch the flowers as they start to bloom.

    If you are looking for homes in Minneapolis that offer waterfront living you have several options. Over 15 distinct neighborhoods offer Minneapolis real estate listings along the banks of the Mississippi River. In addition, several communities contain lakefront property for sale. Minneapolis real estate listings in Linden Hills frequently have lakefront options because Linden Hills spans not one, but two different lakes. Both Lake Calhoun and Lake Harriet are found in the Linden Hills neighborhood. Homes in Linden Hills are predominantly single family bungalows and Tudor style homes with prices at the higher end of the scale for Minneapolis. As of July 2013, homes in Linden Hills average around $350,000.

    If your search for homes in Minneapolis is geared more toward an urban vibe, the Marcy-Holmes neighborhood offers waterfront living along the Mississippi River as well as proximity to both downtown Minneapolis and the famous commercial district known as “Dinkytown.” Housing in the Marcy-Holmes neighborhood is geared toward university students and faculty, meaning you will find apartment buildings, condominiums, converted loft space, and some single family housing. Home prices in Marcy-Holmes are much more budget friendly than other areas of Minneapolis with average prices matching those for Minneapolis as a whole. As of July 2013, median home values in Marcy-Holmes were around $200,000.

    Finally, if you have your heart set on lakefront living but wish to remain on a tight budget, consider the Keewaydin area found on the southeast side of Minneapolis. “Keewaydin” is Ojibwe for “northwest wind,” or “the home wind.” The majority of Lake Nokomis is found within the Keewaydin area. Homes in the area include two to four bedroom bungalow style homes that tend to run just above the city average in price.

    For additional information regarding your Minneapolis home search, consider reaching out to an experienced real estate agent who is familiar with the Minneapolis real estate market.

  • Getting a Loan to Flip a House

    There is an unwritten rule in real estate that stipulates you must not run out of money. For this not to occur, one must do everything in one’s power to secure other people’s money. There are a few ways to hustle for money, but the ideal way is through a loan. Once you secure a loan, you can invest in flipping homes where you can profit handsomely.

    The process of flipping houses is straight forward. This objective is to sell it for more money than invested.

    • Buy a distressed property
    • Clear the house of Its title and taxes
    • Renovate the property
    • Sell the property as a move-in ready home

    The property must be purchased at a low enough price to enable you to invest enough money to renovate the house, enabling you to sell the home at a premium due to its improvements.

    You will want to reduce your financial and operational expenses by securing low-interest rate on the loan and complete the process of flipping a house quickly. Having a work crew ready to start working on the house the very day that you buy it, ensures you will not fall behind schedule.

    The Options to consider when financing flipped houses include either choosing investors who will finance the project or seeking out bank financing. Your decision is based on two concepts:

    • How much money the house will cost
    • The risk involved

    Working with Investors is favorable as it is a direct option to secure money, and you will not need to pay it back all at once. Investors expect a return on their investment, but they are not entitled to monthly interest checks. Instead, the Investors’ return is variable, and it is not expected to pay the investors unless the project makes a profit. The money is considered a “lower risk”, up-front, but a “higher cost”,  long-term.

    Financing the project through banks and mortgage companies is another option of securing money. In the current market, it is ideal to finance flipped houses through variable rate mortgages, as the rates are extremely low. It is important to make sure there are no points associated with these loans as they are non-refundable interest costs. As these loans have a fixed rate, at least for a few years, the interest risk is reduced greatly.

    Straight bank loans with short terms such as ninety days require that the money is paid back at the end of the term. These loans demand that you have excellent credit. Be aware, you must buy, legitimize the title, renovate the physical property, sell it, and close the deal in the chosen time-frame. The period from the sale of the house to the closing can be just sixty days.  A positive note is banks willingly roll the loans over when you have a bona fide buyer under contract. Unfortunately, the interest rates can be eight percent or more.

    Before you jump into the business of flipping houses, assess your cost of money and the risk associated with your debt. It may start off as a lucrative, business adventure, but the reality is that you need an endless supply of money to sustain your investments. In most cases, you will most likely be forced to find additional cash through loans to make a profit in flipping houses.

  • Creating a Floor Plan Before Moving to Your New Home

    If you plan to move shortly, then you have plenty on your agenda to prepare for it. A few of the tasks that are likely to need your attention include finding a moving company, packing, and shopping for furniture for your new place. However, one of the most important tasks may be to create a detailed floor plan of your new home. By allocating time and attention to a floor plan before the move, you will guarantee yourself peace of mind. Not only will your furniture and belongings fit into your new space perfectly, they will provide you the functionality to live there comfortably.

     

    Start With Measurements

    The best way to get started on creating a floor plan of your new space is to take measurements of everything possible that is measurable. You may be able to obtain a copy of your new floor plan to help you with your floor plan, especially if it is a newly constructed home or an apartment. Although measurements of floor plans should be accurate, the scale is not always exact. It is important to take measurements not only of wall space but door and window openings, the distance between electrical outlets and similar areas throughout the house. An accurate measurement allows for a simple process when planning the placement of your furniture. Detailed measurements of your furniture will also ensure it all fits through your doorways.

     

    Utilize Free Online Tools

    If your floor plan is not available, there is the option of creating one yourself. Consider using a free online planning service called FloorPlanner.com. It provides a tool that maps out new spaces easily, accurately and most importantly, quickly. It has a library of tools and objects that allows you to design your floor plans even if you have little or no prior experience.

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    Keep Function in Mind

    As you plan out where your furniture will be placed within your new space, always keep its function in mind. When you are deciding on your furniture placement, try to visualize each room as if it is full of people. The placement of your furniture should allow for a natural flow of movement throughout the room when people are in it. To get the flow of your space right, you may want to collaborate with others and have a brainstorming session.

     

    Plan Time for Changes

    Finally, realize that a digital floor plan is not the same as the real thing. When you move in and set up your new home, expect to make some changes to your floor plan. You may even need to live in your new space for a few days or even weeks before you determine what you are comfortable with and what you are not.

    It is worth taking the time to make a floor plan prior to moving as it will be an immense help in creating less stress, saving time and easing the transition to your new home.

  • Making the Most out of Small Spaces in New York City

    New York condos for sale come at a price that is far higher than what many can afford, and with the ever increasing price per square foot in New York, more and more city planners are approving the development of what are commonly referred to as “micro-homes.”  For most people nowadays, buying New York condos means adjusting to life with less living space, but with a bit of creativity and careful planning, you can make the most out of your small space — both from a practical as well as an aesthetic perspective. Consider the following tips:

    1. Take advantage of the central location. If you are buying a micro-unit so that you can afford to live in the city, then take advantage of your prime location. Don’t be a hermit, and explore the city life. Use the city as an extension of your house, and by making NYC your living room, the small size of your condo or studio will be less perceptible.
    2. Choose colors wisely. Paint the ceiling a light color to give the impression of having higher ceilings. Light colored paint on the walls will also give an overall impression of having a larger space. If you want to add more spice to your color palette, pick just one of your walls and make it an accent wall where you can use a brighter, deeper, or more exotic color. Use that same color as accents throughout the rest of the room.
    3. Scale down. A small space is not where you want to put a giant, deep cushioned, sectional sofa or a heavy, dark wooden kitchen table.
    4. De-Clutter. Decide what you really need in your home and get rid of the rest. Clutter always makes a space seem smaller than it really is. Consider donating your items to Goodwill or Salvation Army as they may offer free pick-up services for large items such as a bed or a shelf.
    5. Go clear. New York condos are the perfect place to include funky, unusual furniture. Consider using Lucite, or clear furniture. Clear chairs, for instance, around your dining room table will make the space seem bigger and less cluttered. You might even want to purchase a clear glass table as well and then keep a vase full of brightly colored flowers as a centerpiece.
    6. Multi-purpose rooms. New York condos are frequently efficiencies or loft style spaces. This may mean that you have one room where you must entertain, cook and sleep. Consider installing a Murphy wall bed that can be tucked away during the day and pulled out at night.
    7. Levitate your decor. Make the best use of wall space by installing floating shelves for storage. You can put these shelves in a kitchen, living room, bedroom, or bathroom and use them for different purposes in each space.

    If you are looking for a “micro-home” among New York condos for sale, you may wish to focus your search in the Upper Eastside of Manhattan or Upper Westside by Central Park. These extremely small spaces by traditional standards are typically less than 400 square feet but include everything you need to live comfortably. What’s more, a new trend is developing to meet the needs of the increasing demand for reasonably priced housing in the city are pre-fabricated “pod” homes. Developers are building entire apartment buildings that are made up of 200-400 square foot living spaces for New Yorker’s who want to live in the Big Apple but can’t afford the high cost of a spacious apartment or condo. For more information about these “micro-homes,” reach out to a local New York real estate agent.

  • Buying a Condo in Chicago

    Buying a condo in Chicago, Illinois can be a fun and rewarding experience. The “windy city” contains condos for any budget and any lifestyle, so if you look hard enough, you will more than likely find what you are looking for among the Chicago condos for sale.

    A condominium offers a number of advantages as well as disadvantages for a home owner. On the plus side, buying a condo in Chicago allows you to own your home without all of the upkeep and maintenance that a traditional single family home requires. Typically, when you are part of a condominium association you will not have to worry about things like lawn care or upkeep of common areas. You may also have access to the same amenities that are often found in an apartment complex such as a swimming pool, gym, business center, or clubhouse. Again, all of these common areas will be maintained by the condominium association. Unlike living in an apartment, however, you have the ability to make the space your own. You may do things like paint the walls, change fixtures, or upgrade appliances to truly make the home reflect you and your family.

    On the flip side, you will need to adhere to the rules and bylaws of the condominium association with regard to what you can do to your property. For example, you may not be allowed to paint the outside of your home a particular color if the bylaws prohibit it. In addition, all of the services that the condo association provides are paid for by monthly dues paid by the condo association members. Depending on where you decide to purchase your condo, the monthly association dues may be different and will be subject to change.

    Chicago condos that are listed on the market for sale include both new and resale condos and reflect almost any architectural style from modern to traditional or from luxurious to modest. When most people think of a condominium they envision an apartment-like space. However, Chicago condos for sale come in many shapes and sizes. Whether you are looking for a luxury condo in a high-rise building or are more interested in finding an affordable living space to own, Chicago offers a wide range of condos for sale.  You can find ultra-chic condos in Chicago that have been converted from old warehouses into lofts at a reasonable price, and for a premium, you can live in a penthouse overlooking the Chicago skyline. There are also a number of condominiums in Chicago that actually look like single family homes that are joined together. These condos tend to have more green space and more traditional landscaping. By taking some time to narrow down you search by deciding exactly what you are looking for in your Chicago condo (as well as how much you can afford), you should be able to find the perfect condo for you in no time.

  • How to Craft an Appealing Offer Letter

    Finally, after a long, arduous search, you found an affordable home in the perfect neighborhood. Now, an offer letter is the only step that stands between you and owning that ideal home. Here are useful tips to craft an offer letter that will, without a doubt, appeal to the seller.

    Talk to Your Attorney or Realtor

    A successful offer letter includes terms of the contract, including the bid price and any contingencies. Make sure you offer legal, fair and feasible conditions. An attorney or your realtor will assist you in providing the correct details.

     

    Share Why You Want the Home

    Paint a picture to the seller with words that include two or three compelling reasons as to why you want to be the next owner of the house. By connecting emotionally with the seller, you increase your chances of winning the bid.

     

    Flatter the Seller

    There is no shame in crafting a pitch that flatters the seller. After all, you want them to feel good about accepting your offer, even if it is not the biggest bid they receive. Mention in glowing terms the recent improvements you noticed of their home such as the recent home remodels or the new hardwood floors. Always thank the seller for the opportunity to meet them. Thank them also for the opportunity to bid on their lovely home.

     

    Do Not Mention a Planned Remodel

    Refrain from mentioning any remodeling plans such as adding a basement or a sunroom in your offer letter. A seller who still has an emotional attachment to their home may reject your offer, particularly if you plan to change a feature that was dear to him or her.

     

    Include Reasonable Contingencies

    Contingencies are conditions included in an offer on a home that must be fulfilled before the deal can close. While too many contingencies will kill an offer, too few may have the same effect. Be reasonable when asking for contingencies, which typically include an appraisal and inspection.

     

    Show Stability

    Stress that you are a “stable” homeowner by providing proof of it. Include a copy of your loan approval and other paperwork that proves you are reliable. Excellent employment history and any other achievements should also be included, along with a copy of your loan approval. Your stability may outshine a higher bid from a buyer who may have problems at closing.

     

    Stay Positive

    Keep your offer letter positive. When you are crafting your offer letter, keep in mind that this is not the appropriate time to mention a chronic illness or any other disturbing news. Instead, stay positive and upbeat as you seek to impress the seller.

     

    Reinforce Your Best Qualities

    Summarize your best qualities and why you would be the best buyer for the seller’s home at the end of the letter. You may even want to share that you are flexible and willing to move in at the seller’s convenience.

     

    Proofread the Letter

    Last but not least, make sure that your offer letter is proofread not only by you but by other friends and family. Spelling and grammar mistakes can quickly kill an offer. An appealing offer letter could land you your dream house, especially when it is well written and easy to read.

     

  • Marketing Your Home for Sale

    Selling your home can be a time consuming and frustrating process without the help of an experienced listing agent. Simply listing your home for sale is easy enough; however, the key to actually selling your home is typically a successful marketing campaign. This is where a skilled and knowledgeable real estate agent comes in handy. Your real estate agent may utilize a number of different marketing techniques to ensure that your listing reaches the widest possible audience which will dramatically increase the likelihood of a prompt and profitable sale.

    Multiple Listing Service

    One of the biggest advantages to working with an experienced listing agent is that your agent will enter your listing into the regional multiple listing service, or MLS, as soon as you decide to list your home. Each MLS is put together and managed by local real estate professionals who come together and collaborate with one another in order to keep an accurate and structured database with consistent information about the homes for sale within their area. The MLS is a database that is only accessible to licensed real estate agents who are members of the specific regional association. By including your listing in the MLS database by the power of your agent, other agents in your area who represent prospective buyers will be able to quickly access your home’s listing. That, in turn, will increase the traffic through your home which should ultimately result in a sale.

    Open House

    An open house is a way for buyers’ agents and the general public to preview your home. When working with an agent, you should first expect to have an open house for local agents to view the property in order to see if it is compatible with the needs of any of their clients. Soon thereafter, you will have to hold an open house for prospective buyers who want to view your home as well as curious passersby and neighbors.  While anyone can put on an open house, an experienced listing agent knows exactly how to stage your home. Also, home buyers tend to feel less pressured when the home’s owner is not there. Your real estate agent will also have the necessary network to get out the word about the open house, ensuring a maximum turnout.

    Advertising

    Selling a home works on much the same principals as selling anything else – the more people who know about the home, the better your chance of finding a suitable buyer. Trying to advertise your home yourself can be costly and ineffective. Even something as seemingly simple as photographing your home can become time consuming and frustrating if you have never done it before. Your agent, however, already has an advertising system that likely includes avenues such as the newspaper, internet and even television or radio that will maximize your home’s exposure. Moreover, your listing agent will more likely have a better idea of how to photograph the property so your home will be shown in the best light – literally.

    Marketing your home for sale without the assistance of an experienced listing agent can be an arduous and futile effort. By depending on an experienced real estate agent you will increase your home’s exposure and will likely have an offer to purchase in no time.

  • Do I Need to Put 20% Down?

    Home buyers across the country ask if it is required to put 20% down on a house to qualify for a new home. It is not difficult to grasp why that “20%” figure strikes such fear into the hearts of potential homeowners, especially the young and not-so-wealthy. The average for home sales has reached $347,000 as of 2015. When you consider that 20% of an average sold home, priced above, is more than $69,000, it resonates that one needs serious savings to provide a 20% down payment.

    The Amount of Money You Pay Up Front is Impacted by the Following:

    • How your loan application is viewed by lenders
    • Your interest rate
    • If you will need to pay for private mortgage insurance (PMI)
    • The Type of loan you qualify for

    Fortunately, the 20% “rule” is considered a myth today. In fact, according to U.S. News & World Report, many lenders will still finance a home sale with less than 20% down. Keep in mind that even if you put down a 20% payment on a house that offers potential benefits, it is not a necessity. There are many loan programs that exist primarily for home buyers that are not able to set aside tens of thousands of dollars. A growing number of home buyers simply do not put 20% down.

    Here are some pros and cons of paying a 20% down payment:

    Why a 20% Down Payment is Important:

    • Higher down payments equal lower monthly payments for you.By paying more up front, you will have smaller monthly payments. Not owing as much money enables your debt-to-income ratio (the total amount paid toward debt every month as compared to your monthly income) to become even lower. Lenders consider your debt-to-income ratio when determining whether you qualify for a loan.
    • A larger down payment can get you a lower interest rate on your loan. That means that you will pay less overall for the life of the loan. That equates to more money in your savings.
    • Putting 20% down allows you to avoid private mortgage insurance (PMI). Making a 20% down payment means you will not be required to purchase private mortgage insurance. PMI is usually a requirement if your down payment is less than 20%. PMI premiums, added to your mortgage, require more money from you.

    The Benefits of Not Paying a 20% Down Payment:

    • You can become a homeownerSaving the money required for a 20% down payment requires years. Working with a lender that accepts lower down payments will help you purchase your home in less time.
    • Waiting may cause you to spend more. Interest rates tend to fluctuate causing prices generally, to rise over time. The money saved today will likely buy you less house in a few years. Consider the following:

    If you pay $10,000 down today at a 4% interest rate or wait several years when you can afford to pay more, such as a down payment of $60,000, but with an interest rate that has risen to 7% – you will end up paying more overall just in interest.

    • A homeowner builds equity as a result of owning their home. Waiting years to become a homeowner while saving money may result in the loss of time and thus the loss of equity.
    • Purchasing a home is for everyone. Whether you can afford 20% down or something less, buying a home is within reach for everyone. Lenders are a great source to learn about the many options available and to find the program that is right for you and your unique needs.

  • Moving to Seattle?

    If you’re relocating to Seattle, you’ll soon discover a vibrant city filled with natural beauties along with some of Washington’s most impressive man-made landmarks, but before actually moving to Seattle, you might want to take some time to get to know city. Make note of the major highlights and points of interest that you want to see and plan a visit into the city. Just to get you started, here are some notable points within Seattle every homebuyer should check out:

    The Space Needle. One of the most recognizable structures in the country, the Space Needle is a prominent building in the Seattle skyline, and it was once the tallest building in the western part of the United States. This structure stands more than 600 feet tall and it has an observation deck where visitors can look out over the city.

    Culture. Seattle is home to the Seattle Symphony, which has been playing for more than 100 seasons and has been nominated for two Emmys and multiple Grammys. Seattle has a variety of museums, but one of the most distinct offerings is the Museum of Flight, which is an air and space museum slightly south of downtown Seattle. The museum holds more than 85 aircraft, including planes from World War I and World War II.

    Coffee Shops. This city is a renown coffee haven, in part because the first Starbucks location was opened in Seattle and is still there today. There are many other high-quality coffee shops in the city and many people credit Seattle with starting the espresso craze back in the eighties. If you’re a coffee aficionado you can take a tour of the top coffee shops around the city and discover your favorites.

    Pike Place Market. One of the most iconic areas of Seattle is the Pike Place Market, which is a large, outdoor public market near the waterfront. Relocating to Seattle means you’ll have access to a market filled with vendors who are selling a wide variety of products. The market has a friendly, energetic and eclectic vibe that both tourists and natives frequent.

    Outdoor Activities. Although Seattle is definitely an urban community, there are still plenty of opportunities for outdoor activities near the city. Seattle is surrounded by water, so residents and visitors alike have convenient access to water recreation such as sailing Puget Sound, kayaking around Green Lake, or fishing in Lake Union. What’s more, Seattle residents are surrounded by multiple biking and hiking trails including Cheshiahud Lake Union Loop, which is a beautiful 6-mile trail that winds around Lake Union. Many Seattle residents and visitors also enjoy spending some leisure time along the Seattle shoreline while taking in the scenic views.

    Seattle is a city that brings together a profusion of attractive elements into one vibrant location. If you’re moving to Seattle, there’s a good chance you’ll find plenty of events, activities and locales to fall in love with.