2 min read

3 Ways to Improve Home Buying Power

By Chris on Dec 10, 2020 6:53:25 AM

If you or anyone you know is buying a house this summer, chances are you’ll be dealing with competing for offers and low inventory issues.  Here are three ways to avoid getting priced out of the house you want:



1 – Consider Your Overall Debt Strategy
For example, what would it look like if you used some of your down payment funds to pay off other debts instead of using those funds for a down payment?  This may open the door to getting you qualified for a larger mortgage so you can bid higher on the house. Plus, home loans often carry a lower after-tax interest cost than other debts that may not be tax-deductible. Please see a CPA for details on the tax-deductibility of mortgage debt in your situation.

2 – Consider an Adjustable Rate Mortgage (ARM)
Depending on bond market conditions, the interest rate (and monthly payment) on an adjustable-rate mortgage can often be lower than a fixed-rate mortgage.  If this is the case in your situation, you may be able to use an ARM to comfortably afford the home.  Keep in mind that many ARMs have interest rates and payments that are fixed for a period of 5 years or 7 years.  This means the only risk to you is that you keep the house for longer than the initial fixed period AND interest rates go up considerably after that timeframe.

3 – Consider the Use of Gift Funds
Gifts from friends and relatives can often be used for a down payment.  Gift funds could be very useful if you find yourself in a bidding war where you’ve maxed out your mortgage options and the only other option is to come to closing with more cash.

Contact me for further details and to explore your mortgage options!

 

Topics: Real Estate WeAreBrokers Mortgage Loans Credit Home Mortgage Alameda
3 min read

3 Ways to Avoid Getting Outbid on Your New Home

By Chris on Nov 16, 2020 9:11:18 AM

Bidding for a new home can get pretty fierce in today's market.  Here are three potential solutions to avoid getting outbid on your new home:


  1. Turn in your loan paperwork BEFORE you place an offer. 
    In many cases, you are bidding against cash buyers who don't need to wait for financing approvals.  Look at it this way:  if you were the seller, would you prefer to do business with a buyer who needs to wait for financing approvals or a cash buyer who can close the deal quickly?  With that in mind, it's important to be proactive and provide your mortgage lender with things like your source of down payment funds, your asset documentation, your credit report, and your income documentation.  This way, you'll be in a better position to close the deal quickly and compete with those cash buyers.
  2. Pay cash, but do it right. 
    Keep in mind that you only have 90 days after closing to place a mortgage on a property that you bought with cash if you want to secure your tax deduction.  (For more info, see my article entitled, 90 Day Rule for Cash Buyers.)  In order to get that loan approval after closing, you'll need to document the source of funds that you used for your cash purchase.  Talk to me for more details so that you can avoid problems down the road.
  3. Write your offer correctly.  
    Mortgage lenders are implementing some pretty significant changes this year to the legal requirements for mortgage paperwork as part of the Dodd-Frank Act. When real estate agents and loan officers aren't familiar with some of these changes, it causes unnecessary delays in the loan process. That's why it's important to work with someone like myself who keeps up to date on all the new requirements. I can work with your real estate agent to make sure you write your offer correctly in the beginning so that you won't have to redo the paperwork and delay the closing.

 

 

Contact me so that we can further explore any/all of these ideas together!

 

Topics: Real Estate Mortgage Loans EstaR Mortgage Home Mortgage Alameda
2 min read

3 Reasons to Finance Your Home Improvements

By Chris on Nov 10, 2020 11:08:04 AM

If you’re thinking of paying cash for home improvements, you may want to think twice.  Here are three reasons why you may want to consider a cash-out mortgage refinance or home equity loan instead:




1 – Preserve your cash: a large home improvement project could quickly deplete your savings. Think about this project in the context of the next 3-5 years. What other large expenses could crop up during that time period, and would it be useful to keep your savings on hand for those items?

2: Opportunity Cost of Money: would it more useful to invest that money in a college savings plan or retirement account? For example, if a home improvement loan costs less than what you’re earning in your investment accounts, you may be better off investing your money instead of paying cash for the improvements. Talk to your financial advisor for more details.

3: Possible Tax Advantages: you may be able to deduct the interest on your new mortgage or home equity loan if you itemize your tax deductions, and if your total aggregate mortgage and home equity balances are $750,000 or less. Please see a CPA or tax advisor for details.

Keep in mind that house prices have improved in many markets, so you may have enough equity in your home to refinance your mortgage or take out a home equity loan for home improvements. Also, interest rates are still very attractive, so you may want to act now instead of waiting.

Contact me to explore your financing options!

Topics: Real Estate Mortgage Loans Home Improvements Home Mortgage Alameda

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