Here’s WHY You Should BUY

Real Estate Mogul: Here’s Why You Should Buy | MyKCM

Real Estate mogul, Sean Conlon, host of The Deed: Chicago on CNBC, was recently asked the question, should you buy? Or should you rent a house?

 

Conlon responded:

“I am a true believer that you save every penny and you buy your first house… and that is still the fastest path to wealth in this country.”

Conlon went on to suggest that first-time buyers put down 10-20% “if they can make it work,” and to remain in their home at least 4-5 years to see a return on their investment.

Who is Sean Conlon, and why should you listen to his advice?

Within a few years of working in the real estate industry, Conlon had established himself as one of the leading agents in the United States and has founded 3 billion-dollar brokerages dealing in residential, commercial and investment sales. Since immigrating to America from the United Kingdom in 1990, he believes very strongly in the American Dream and the role that homeownership plays in achieving it. Conlon is quoted on his website as saying:

“I treat people the way I would like to be treated if I went in to buy a house and I work harder than anybody I know. I think if you do that in America, you will always succeed.”

Bottom Line

Homeownership is an investment you can leverage against in the future that not only provides shelter and safety but also helps you build your family’s wealth. If you are debating whether or not to purchase a home this year, let’s get together to discuss the opportunities available in today’s market!

Rethinking Your Christmas List This Year

This article comes courtesy of Realtor.com

Getting a Down Payment as a Gift? Why NOT??

Why not give a gift that will KEEP on giving for years to come?!?

The first time I talked with a mortgage broker about buying a home, he suggested I just ask my parents for help coming up with the down payment.

“It’ll be easy,” he assured me. “You just get it as a gift. Lots of first-time buyers do it.”

In some ways, he was right. Many people do get help from their parents—after all, many of us are dealing with crippling student debt or other financial burdens that make it difficult to amass the cash needed for a down payment.

But he was wrong about one big thing: It ain’t easy.

Getting down payment help from the parents (or anyone else) isn’t as simple as just asking and then receiving when the money rolls in. If you’re going to do it, you’d better do it right. Avoid some of the big mistakes I made with an eye toward these tips.

1. The down payment must be a gift

What my mortgage broker should have told me is that the money has to be a gift. If a lender suspects the money might be a loan, repaying said loan will be factored into your mortgage approval amount and you’ll qualify for less than you might have wanted.

In order to prove it’s a gift, you’ll have to get a gift letter from the person who gave it to you—your parents (or the gifters) will need to swear on paper they don’t plan on asking for the money back. Thankfully, my wise parents had already put up a down payment for my sister and they knew this drill. But if yours don’t, get them up to speed quickly.

“The gift letter is very serious,” says Casey Fleming, mortgage adviser and author of “The Loan Guide: How to Get the Best Possible Mortgage.”

“While it is doubtful that a lender would ever audit a file after the fact to see if the recipient is paying the donor back, if the transaction goes bad, you might very well find yourself with a subpoena in your hand.” (True story—it’s a felony to lie on a mortgage application.)

2. You’ll want the down payment in advance

When you’re getting help, you have two options: 1) Take the money from Mom and Dad now, during the early planning stages, and save yourself some headache (and paperwork) later on, or 2) wait until you’re ready to buy and have your parents send the money just before you walk into your mortgage broker’s office.

Both will work, but if you have any say in the matter, get the money as early as possible.

“If the funds are ‘seasoned’—meaning that they’ve been in the account long enough so that the last two bank statements don’t show the deposit—the gift does not have to be addressed,” Fleming says.

My parents opted for a last-minute donation, and I was more than happy to have the help however they chose to give it. But it was tricky getting a lender to take it on faith that I’m going to get a big influx of cash once I find a home to buy.

3. There’s a limit to what can be gifted (tax-free)

The timing isn’t the only thing that’s tricky. There’s also a limit to how much someone can fork over to you—tax-free, at least. Under the current rules, any gift of $14,000 and up will incur a tax bill. So your parents will have to gift you less than that, or pay a tax penalty at the end of the year.

Of course, there is a (perfectly legal) loophole of sorts.

“It is $14,000 per year per donor, so a couple could give $28,000 ($14,000 from each) to their child,” Fleming says.

4. Gifted down payment funds will have to be verified

So you did your due diligence and you got a gift letter. Good for you! But guess what? That gift letter might not be enough for your lender to verify the funds. To do that, your parents are going to have to provide a paper trail.

Bank statements should do it, Fleming says, but be ready for this to feel a little … invasive.

Most lenders will require two months of statements from the gifter’s account, including all pages from each statement. Those bank statements will need to include all relevant information, meaning your lender is going to see your parents’ bank account number and personal information.

That felt weird to my parents, who worried about the security risk of faxing that information to a virtual stranger. But really—it happens all the time, so don’t let them freak out over it.

5. Your parents can’t go broke trying to help you

We both know your parents aren’t going to give away all of their money for the sake of your down payment, but your lender has to know that, too. That’s why your folks will have to prove with bank statements that they can comfortably afford the gifted down payment—and have sufficient funds left over.

If your parents are going to use a separate account for the down payment, or they split their money over several accounts, make sure your lender knows what’s going on and have your parents provide extra proof that they can afford to help you.

Just be sure to also provide your parents with extra proof of your gratitude. And invite them over for dinner once in a while, eh?

—————

| Nov 28, 2016
Angela Colley lives in New Orleans, where she writes about buying, selling, and renting news for realtor.com. Her passions include animal rescue, photography, historic homes, and Southern architecture..

What the Rise in Federal Interest Rates Means to You…

Mortgage rates moved just slightly lower, despite the long-awaited Fed rate hike.  Once again, that’s LOWER mortgage rates and a HIGHER Fed rate.  So exactly HOW is this possible?!?

The rate that moved higher is the Federal Reserve’s Target Rate.  This is the rate banks charge other banks to borrow money overnight.  It’s called the Fed’s Target Rate, because the Fed doesn’t actually directly enforce the rate.  It merely “targets” the rate (or the range of rates, in this case) that it believes is in line with its policy goals.  The Fed can then employ several tools to influence the overnight rate and bring it in line with the target range.

If you’re not already well-versed in the reasons that banks borrow from other banks overnight, don’t worry about that.  All you need to know is that the Fed’s target rate is vastly important to the global financial system, and it has far-reaching effects on all manner of interest rates.

In other words, a Fed rate hike is a big deal, but bigger to some than others.  Mortgage rates are less directly connected to the Fed’s Target Rate, as could be easily seen in yesterday’s modest move lower.  The Fed hiked its rate by a quarter of a point–an amount that would be unimaginably severe in the mortgage world.  Such a move has only happened a few times in history on a single day.

The caveat is that mortgage rate movement is given plenty of time to roam free, day in and day out.  Meanwhile, the Fed rate only moves when the Fed announces it, which is almost always at one of their meetings.  Those only happen 8 times a year.

In other words, mortgage rates have had time to do whatever they needed to do to get ready for yesterday’s Fed rate hike. 

The bottom line is that mortgage rates do, in fact, care about the Fed rate to some extent.  They’re simply not joined at the hip.

In terms of specifics, the mortgage rate movement was very small.  Most lenders continue to quote 4.0-4.125% on top tier conventional 30yr fixed scenarios.

If you have any questions please feel free to contact me!

Read the full article  from Mortgage Daily here:

Fed Rate Goes Up. Mortgage Rates Go Down

 

Serving greater MA and CT joyfully ~~ Remember, your best investment opportunity won’t fit into a safety deposit box, but you can live in it…

Thanks for reading…

Tori

 

 

Deal of the Century – Is it still a good time to puchase a home?

Deal of the century  (click for a printer-friendly version of this article)

The Deal of the Century?? | Simplifying The Market

Recently, Freddie Mac published a blog post titled Mortgage Rates: Still the Deal of the Century. They explained that, if you are planning to purchase a home, now may be the time:

“If you are in the market to buy a home, today’s average mortgage rates are something to celebrate compared to almost any year since 1971.”

And they let their readers know that there is no guarantee that rates will remain this low:

“Over the past few years, we’ve enjoyed a long run of historically low mortgage rates. While no one expects them to change dramatically overnight, they are expected to head up. Most experts agree that mortgage rates will drift up in the coming months to end the year approaching 4.50%… Buying a home is a big investment – perhaps the biggest one you’ll make in your life. So, it’s important to be sure you are ready to make that purchase. If you are ready, today’s rates are not to be missed.”

The article went on to calculate what the principal and interest payment would be based on a $200,000 fully amortizing mortgage at different times in history.

Mortgage Payments | Simplifying The Market

Here is a look at rates over the decades:

Historic Mortgage Rates | Simplifying The Market

Here is a look at rates over the last four years and what Freddie Mac projects for next year:

30 Year Fixed Rate Mortgage Rates | Simplifying The Market

Bottom Line

If you are thinking of buying your first home or looking to move up to your dream home, now may be the time to do it.

Contact me today for an appointment to discuss your home ownership investment!

Tori Denton, REALTOR®

413.301.4614

Bold Facts about Reverse Mortgages: Risks and Dangers

The Hidden Truths About Reverse Mortgages

Source base: Carolyn Rosenblatt – Forbes on-line

The ads make them look so great. Vacations, living a great lifestyle, happy couples, smiling at their good fortune. Rewards are repeated again and again.

Sincere movie stars of a certain age make the commercials believable. You can get cash now. It’s so easy. Just get your reverse mortgage and your problems will be solved. Pay off debt. Have fun.

What’s wrong with this picture?

A reverse mortgage is more debt and one of the most expensive forms of credit you can get.

At the San Francisco 7th Annual Conference on Elder Abuse, a panel spoke on this subject, drawing back the curtain that cloaks the truth: reverse mortgages are not for just anyone and they can create some new problems the broker isn’t telling you about.

Here are a few of the issues the panelists discussed.

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The risks and dangers of reverse mortgages:

The Elder Might Need A Care Home in the Future
If you incur the debt of a reverse mortgage, or your aging parents do, it’s ok as long as they can live in that home. What happens when they have to move out of the home into assisted living or a nursing home? The mortgage becomes due. Now, there is the expense of paying it off, besides the high cost of the assisted living or nursing home care. It can leave an elder homeless.

It Can Affect Any Dependent in the Home

If the elder who needs care in a facility has non-borrowing family members in that home, the loan is still due. Anyone left in the home must move out, go to a care facility or be taken in by someone else. Those displaced if a borrowing elder has to go to a care facility can include a non-borrowing spouse, child or grandchild. They are “tenants” according the the rules of reverse mortgages and they have to leave when the elder does.

It Can Go Into Default
If an elder with a reverse mortgage fails to pay property taxes, to keep up insurance on the home, or fails to maintain the home, he is in default. The lender can then foreclose. Lenders are in a good position to purchase such properties cheaply and then flip them for a good profit. Elders who are low on cash may fail to pay home insurance premiums or property taxes. If they are getting forgetful, they might not maintain their properties.

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When the Elder Dies, the Heirs Must Pay Off the Loan

The entire principal, plus accrued interest and service fees must be paid in full to the lender before the heirs can rightfully take possession of the home. This debt may exceed the actual market value of the home. If they can’t pay the debt, the lender has the right to foreclose and sell the property. Low wealth heirs are not likely to be able to pay the debt and those homes fall into foreclosure. Goodbye inheritance.

The Amount the Lender Will Loan is Limited

There are seemingly irrational formulas used to calculate how much a borrower can get on a reverse mortgage.  If an elder lives into one’s 90′s, becoming more common these days, there is a risk that the amount loaned will not be enough to sustain the elder who needs long term care at home.  The elder can run out of money to make the loan payments, go into default and end up homeless and impoverished. This is a real risk, particularly for anyone who thinks it’s a dandy idea to take out a reverse mortgage to pay for home care providers.  If the elder borrows, say, $200,000, and ends up needing care 24/7, that reverse mortgage cash she got will be exhausted in about two years or less.  Then what?  Default, foreclosure and Medicaid paid nursing home.

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According to Norma Paz Garcia, Senior Attorney for Consumer’s Union of the United States, there is no suitability standard for reverse mortgages for seniors. We need standards.  She warns that all seniors need truthful counseling to warn of the negative consequences and potential harm of reverse mortgage products.  She urges borrowers to consider any other possible alternatives to raising cash such as a forward mortgage equity lines, inter-family loans, local government loans or public benefits.

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 Consider a reverse mortgage an option of last resort.

If you or your aging parent gets charmed by the TV ads, get advice from a competent financial planner and elder law attorney before doing anything.  Recognize that your aging loved one might not be in perfect health to the end of her days and that care at home might cost more than a reverse mortgage could cover, especially over a period of years.  There just might be less costly, smarter ways to deal with the need for money when funds run low.

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If you need a quick property value estimate, contact me and I will provide you with comparable sales to help you judge the validity of the reverse mortgage lender’s estimate.

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