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Displaying blog entries 31-40 of 56

Buying Is 38% Cheaper Than Renting

Monday, April 21, 2014
by Scott Darling

Buying is 38% cheaper than renting! This statement reflects Trulia’s latest Winter 2014 Rent vs. Buy Report. “Although the gap between renting and buying is narrowing across the U.S., homeownership is still 38% cheaper than renting.”

When evaluating buying a Chester County home vs. renting you need to understand the local math. Although the national average is 38% cheaper for buying vs. renting, the range across the country is from 5% cheaper to 66% cheaper.

The Trulia report concludes that there is nowhere in the US that buying a home is not cheaper than renting. However, the percentage of difference does vary widely. That is because there are variables that depend on local circumstances such as:

  • Local home values
  • Local rents
  • Mortgage interest rates
  • Rates of value appreciation

If you really want to understand the detailed numbers go to the full report.

You can also go to Trulia’s Rent vs. Buy Calculator that allows you to plug in your local variables.

Borrower’s credit score is another factor you need to take into account when evaluating your situation. Mortgage interest rates are perhaps the most important variable in the buy vs. rent calculation. One of the factors that affects interest rates the most is the borrower’s credit score. The lower your credit score the higher the interest rate you will pay.

The monthly payment on a $200,000 loan for 30 years increases by $60.27 for every 0.5% added to the interest rate. That means the decision about whether to borrower using a variable interest rate (such as an ARM) or a fixed interest rate over the life of the loan is very important.

The Trulia report also evaluates the “tipping point” for interest rates that will cause renting to be cheaper than buying. For the national average that leads to the 38% figure the mortgage interest rate would have to rise to over 10%. However, you should look at local factors involved for a Chester County home using the Rent vs. Buy Calculator.

You can follow this link for the current Forbes.com interest rate forecast. You can also find current mortgage interest rates at bankrate.com.

Current indicators are that both home prices and interest rates are going to rise steadily over the next five years. That is good news for potential buyers, and means now is a good time to buy. However, if you’re hoping to become a homeowner anytime soon use these tools to do some research.

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What’s Behind the Rise In Interest Rates?

Monday, November 18, 2013
by Scott Darling

The cost of buying a Chester County home is going up. What's behind the rise in interest rates? Is now still a good time to buy? Here's an interesting video explaining a little bit about why mortgage rates are rising.

There's also a little bit in here about how "staying on the fence" could lead to a higher monthly payment.

That said, rates are still historically low and it's a great time to buy. Wondering if now is the time for your to buy a Chester County home? Give us a call! We’ll help lay out your options so you can make an informed decision.

Feel free to forward this to a friend who might be interested.

 

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What Will 2013 Hold For Mortgages?

Wednesday, February 20, 2013
by Scott Darling

mortgages

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Affects Of Fiscal Cliff Tax Bill On Chester County PA Real Estate

Thursday, January 17, 2013
by Scott Darling

On January 1, 2013 both the Senate and House passed H.R. 8 legislation to avert the “fiscal cliff.” The bill will be signed shortly by President Barack Obama.

fiscal cliffBelow is a summary of real estate related provisions in the bill as summarized by the National Association of Realtors:

Real Estate Tax Extenders

  • Mortgage Cancellation Relief is extended for one year to Jan. 1, 2014
  • Deduction for Mortgage Insurance Premiums for filers making below $110,000 is extended through 2013 and made retroactive to cover 2012
  • 15-year straight-line cost recovery for qualified leasehold improvements on commercial properties is extended through 2013 and made retroactive to cover 2012
  • 10 percent tax credit (up to $500) for homeowners for energy improvements to existing homes is extended through 2013 and made retroactive to cover 2012

Permanent Repeal of Pease Limitations for 99% of Taxpayers

Under the agreement so called “Pease Limitations” that reduce the value of itemized deductions are permanently repealed for most taxpayers but will be reinstituted for high income filers. These limitations will only apply to individuals earning more than $250,000 and joint filers earning above $300,000. These thresholds have been increased and are indexed for inflation and will rise over time. Under the formula, the amount of adjusted gross income above the threshold is multiplied by three percent. That amount is then used to reduce the total value of the filer’s itemized deductions. The total amount of reduction cannot exceed 80 percent of the filer’s itemized deductions.

These limits were first enacted in 1990 (named for the Ohio Congressman Don Pease who came up with the idea) and continued throughout the Clinton years. They were gradually phased out as a result of the 2001 tax cuts and were completely eliminated in 2010-2012. Had we gone over the fiscal cliff, Pease limitations would have been reinstituted on all filers starting at $174,450 of adjusted gross income.

Capital Gains

Capital Gains rate stays at 15 percent for those in the top rate of $400,000 (individual) and $450,000 (joint) return. After that, any gains above those amounts will be taxed at 20 percent. The $250,000/500,000 exclusion for sale of principle residence remains in place.

Estate Tax

The first $5 million dollars in individual estates and $10 million for family estates are now exempted from the estate tax. After that the rate will be 40 percent, up from 35 percent. The exemption amounts are indexed for inflation.

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Possible Options For Your Chester County Real Estate Mortgage

Monday, September 24, 2012
by Scott Darling

As the owner or potential owner of Chester County real estate, there are two currently popular options re: your mortgage that you might want to consider:  early payoff and/or shorter term.  As mortgage rates sink deeper into record territory, many homeowners are in a position to explore the possibilities of paying off or paying down their loans or choosing a 20, 15, or even 10 year term rather than the traditional 30.

mortgageAs with most any financial transaction, experts disagree about the advantages and disadvantages of an early payoff.  Most, however, will tell you that the decision to pay off your Chester County real estate mortgage early should be based on a number of factors, including:

  • Your ability to sustain your desired lifestyle during retirement. If using your savings to pay off the mortgage, don’t forget to give yourself a financial cushion for life’s inevitable surprises.
  • The interest rate you are paying on your mortgage. If your current interest rate is high (i.e., greater than 5 percent or variable) and you are unable to refinance, it might make sense to pay off the mortgage earlier.
  • Your tax bracket (i.e., how beneficial the mortgage interest deduction is to you).
  • Psychologically, the importance of not having a mortgage. Some folks derive significant satisfaction in having no debt; for others, it’s not a big concern.

To further aid you in making a decision in this matter, visit Forbes for more detailed information and Bankrate.com for an easy-to- use early payoff calculator.  Click here to learn more about paying down a mortgage as opposed to paying it off.

Much has been written recently about the recent trend of taking out Chester County real estate mortgage loans for fewer than the traditional 30 year term.  More and more homeowners are refinancing, lowering their interest rate, and opting for a shorter-term loan. Also, if you’ve paid down your principal significantly, current interest rates are substantially lower than your old interest rate, your income has increased, or  your non-mortgage debt has decreased, you might be able to afford the monthly payments on a 15-year mortgage. In addition, recent changes in the Obama administration’s Home Affordable Refinance Program (HARP) recently cut the fees for certain borrowers getting new loans if they reduce the term of the mortgage to less than 30 years.   Click here to see interest rate comparisons for varied terms.

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From the FHA: MIP Update

Monday, March 19, 2012
by Scott Darling

Most people, when told that both good and bad news awaits them, will opt to hear the bad tidings first.  Although they dread receiving unpleasant news, their hope is that the ensuing good news will erase, or at least soften, what they heard earlier.  In the assumption that owners of Chester County PA real estate share this approach, the FHA has recently announced bad news/good news regarding their mortgage interest premiums (MIP) and fees.

The Bad News:  As part of ongoing efforts to encourage the return of private capital in the residential mortgage market and strengthen the Federal Housing Administration’s (FHA) Mutual Mortgage Insurance Fund, a new premium structure for FHA-insured single family mortgage loans on Chester County PA real estate was announced. 

  • FHA will increase its annual mortgage insurance premium (MIP) by 0.10 percent for loans under $625,500 and by 0.35 percent for loans above that amount. 
  • Upfront premiums (UFMIP) will also increase by 0.75 percent. This change is effective for case numbers assigned on or after April 1, 2012.  
  • FHA is also exercising its statutory authority to add an additional 0.25 percent to mortgages exceeding $625,500.  This change is effective for case numbers assigned on or after June 1, 2012.

FHA estimates that the increase to the upfront premium will cost new borrowers an average of approximately $5 more per month.  These marginal increases are affordable for nearly all homebuyers who would qualify for a new mortgage loan.  Borrowers already in an FHA-insured mortgage, Home Equity Conversion Mortgage (HECM), and special loan programs outlined in FHA’s forthcoming Mortgagee Letter will not be impacted by the new pricing changes.

So, if you are FHA qualified and have been sitting on the fence, NOW is the time to become a Chester County PA real estate owner while you can save money!

The Good News:  In a bid to make its Streamline Refinance Program more affordable to U.S. homeowners the FHA has introduced a new concept in mortgage insurance premiums. Going forward, the amounts the owner of Chester County PA real estate will pay for FHA mortgage insurance will depend on the age of existing FHA mortgage.  The longer you've had your mortgage, the less you're going to pay for MIP.  Certainly a reason to smile for many people!

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Home Affordable Modification Program Update For Chester County PA Homeowners

Tuesday, January 17, 2012
by Scott Darling

When the Obama administration announced the Home Affordable Modification Program (HAMP) in 2009, officials estimated 3 to 4 million borrowers would seek relief from their mortgages through the program during the worst recession and housing market collapse in decades.  More than two years later, however, those projections have proven to be optimistic, to say the least.  Mired in extensive paperwork, lost documentation, costly time delays, and extreme frustration on the part of the Chester County PA home owners attempting to participate, the program has been examined, monitored, revised over and over to make the process a smoother and more successful one.  A daunting task, however; the most recent report by the Office of the Special Inspector General for the Troubled Asset Relief Program SIGTARP) devoted over 15 pages to a description of procedures, requirement, and changes involved with the program!

Originally designed to help financially struggling owners of Chester County PA homes avoid foreclosure by modifying their loans to a level that is both affordable and sustainable, HAMP’s success is uncertain—or at least arguable.  Critics charge that only 700,000 owners have actually benefitted from the program and claim that while the Treasury initially committed $75 billion of Troubled Asset Relief Program funds to the HAMP initiative, it now appears it will spend only $4 billion on HAMP incentives.

The members of the Congressional Oversight Panel even stated that government’s loan modification program was “ineffective,” and they claimed that the Treasury’s reluctance to address flaws of the program has had “real consequences.”  Their report also states that the Treasury has failed to hold loan servicers accountable when they have repeatedly lost borrower paperwork or refused to perform loan modifications. And TARP has stated “The program has been beset by problems from the outset and, despite frequent retooling, continues to fall dramatically short of any meaningful standard of success."

There are, of course, success stories, and supporters point out that the 700,000 approved loan modifications mean that many fewer foreclosures.  They urge financially-strapped home owners to fully investigate the program, get help to complete the sometimes grueling process, and use websites specifically designed for the potential applicant.  They also maintain that eligible homeowners entering HAMP have a high likelihood of earning a permanent modification and realizing long-term success. The rate of modifications moving from trial to permanent is up to 74 percent, and the average time to convert from a trial to permanent modification is down to 3.5 months.

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Free Apps To Save Money This Holiday Season

Monday, December 19, 2011
by Scott Darling

november

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How To Pay Off Your Mortgage Faster

Wednesday, November 16, 2011
by Scott Darling

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Winter Heat or Summer Cooling - It's always good to seal your windows. Here's a LOW COST way of saving money and being more comfortable at the same time.

Friday, May 27, 2011
by Scott Darling

  • Got Leaky Windows? 3 Low-Cost Tips to Fix Them

    I used to hang an extra woolly robe in my bathroom because my post-shower route took me past a window so drafty it made me wonder about the etymology of “window.” Turns out it comes from the Anglo-Saxon “vindr” and “auga,” which translates as “wind eye.” How appropriate. Read

Visit houselogic.com for more articles like this.

Copyright 2011 NATIONAL ASSOCIATION OF REALTORS®

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Displaying blog entries 31-40 of 56

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