September 22nd, 2015

Cut Mortgage Insurance

Making additional payments toward the principal of your mortgage will do three things for the homeowner: save interest, build equity and shorten the term on fixed rate mortgages.


These things should be beneficial enough to justify the extra payments but another huge advantage is available to those who have private mortgage insurance on their loan. Mortgage insurance rates vary but can range from seventy-five to two hundred dollars a month on a $200,000 mortgage.

Lenders are required to automatically terminate mortgage insurance when the principal balance reaches 78% of the original value of the property. It is important for homeowners to monitor their balance because sometimes lenders may inadvertently fail to terminate the coverage.

Mortgage insurance is a necessary but expensive requirement for many people who are limited to a down payment of less than 20%. Eliminating the need for it can save thousands of dollars over time.

The Consumer Financial Protection Bureau, CFPB, issued a compliance bulletin on August 4, 2015.


Get Ready for College

August 18th, 2015

Get Ready for College

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One of the important things as a parent is to plan for their children’s education. Let’s look at two different approaches: a savings account or investing in rental real estate.

Assuming your child is five years old and you start putting $250 a month in a savings account earning 2%, in 13 years you’d have $44,497.41 to pay for their college. Anticipating that isn’t going to be enough, you’d have to save $500 a month to end up with $88,995.

Another way would be to make a lump sum contribution of $20,000 today in a mutual fund earning 5% that would be worth $37,713 in 13 years. You’d have to make a $47,196 initial contribution to end up with the same $88,995.

An alternative to savings would be to invest in a $100,000 home in a good area. Assuming a three percent appreciation and rent of $1,000 a month, an initial investment of $23,500 could have a future wealth position of $83,838 at the end of 13 years.

Obviously, this is just an example of why rental homes are the IDEAL investment providing Income, Depreciation, Equity build-up, Appreciation and Leverage. While rentals certainly have more risk and management than a savings account, they do provide an opportunity for a higher rate of return.

If you’re concerned about paying for college tuition in the future, it is certainly worth investigating the possibility of investing in rental homes today.

Cost of waiting to buy!

August 10th, 2015

Wait a Year…It Won’t Matter?

There is a frequently quoted expression “more money has been lost from indecision than was ever lost from making a bad decision.” Regardless of the extent of its accuracy, most people can recall when procrastination has cost them money.


There are markets so short of inventory that buyers have become frustrated after losing bids for several homes and have decided to wait until more homes come on the market. In the meantime, the shortage of homes is driving the prices up more by the month.

There are buyers who can’t find what they want for the price they want to pay and think that waiting will somehow change things. In some cases, what they want just keeps moving farther and farther away from them.

The other dynamic in play is, of course, the mortgage rates. While they’ve remained low for several years, most experts agree that they’re going to rise; it’s just a matter of when. If you look at what positive increases in both of these would do, it becomes apparent that waiting will matter.

A $250,000 home purchased today on a FHA loan at 4% for 30 years will have a principal and interest payment of $1,151.76. If a buyer were to wait a year and the price increased 5% and the rate went up by 1%, the payment would increase by over $200 a month. In a seven year period, the increased payment alone would cost the buyer over $17,000.

Use the Cost of Waiting to Buy calculator to see how much it will matter based on the home you want to buy and what you think the prices and rates will do in the next year.


July 17th, 2015

Build Equity Faster

Equity is an asset and an appreciating home is an investment. While some people have resolved themselves that a mortgage payment is a normal part of life, others have set goals to get their home paid for as soon as possible. There are several strategies that will work but they all require persistent vigilance.

A shorter term mortgage such as 20, 15 or even 10 years will not only pay off sooner, it will generally have a lower interest rate. A recent comparison at Freddie Mac’s Primary Mortgage Market Survey showed a 30 year fixed-rate mortgage at 4.04% compared to a 15 year fixed-rate at 3.20%. The fees for the shorter term were even .1% less. The shorter term with the lower rate would have a higher payment but some people consider it forced savings.

Additional principal contributions to any length fixed-rate mortgage will save interest, build equity and shorten the term of the loan. Some homeowners may apply lump sums at various times during the year such as when bonuses are paid or a tax refund is received.

Other owners might increase their payment by $100, $200 or more each month. Setting the increased payment through electronic banking would insure that you consistently make the extra amount.

Bi-weekly payments make 26 half-payments in a year which equals 13 full-payments. Because of the frequency, it reduces the interest that is due. This might work well for borrowers who are paid every two weeks but could present cash flow problems for those who are paid on schedules that don’t coincide.

Making one extra payment a year will have almost the same effect as a bi-weekly payment. The 13th payment would be completely applied to principal.

Before embarking on one of these strategies, it would be wise to verify with your lender that it complies with their policies. Check out the Equity Accelerator to see how it could affect your loan.

Grilling Safety

June 29th, 2015

Grilling Safety

More people grill in July than any other month. While grilling is all about good food, fun, friends and celebrations, it is important to make sure that accidents don’t interrupt your activities. Approximately half of the injuries involving grills are thermal burns. If you work with fire, there’s a chance of getting burned.

  • Only use BBQ grills outdoors and in ventilated areas.
  • Place the grill away from home or anything that could be flammable.
  • Keep grill stable.
  • Keep fire under control.
  • Keep children away from grill.
  • Never leave the grill unattended.
  • The grill lid should always be open before lighting it.
  • Grease should not be allowed to build up in the grill.
  • Use long-handled utensils.


  • Check the tank hose and connections for leaks before using it for the first time each year by using a light soapy water solution to see if bubbles appear.
  • If you smell gas when the grill is lit, move away from the grill and call the fire department.
  • If the flame goes out, turn off the gas for 15 minutes and open the lid before re-lighting it.


  • Never add any starter fluid or other flammable liquid to a fire.
  • Only use charcoal starter fluid and not gasoline, kerosene or other flammable liquid.
  • Keep starter fluid away from heat sources and out of reach of children.
  • Electric charcoal starters do not use fire but have a coil to ignite the coals.
  • When finished cooking, close off the grill vents to suffocate the fire and save some of the remaining charcoal.

 Practice safe grilling and enjoy the occasions to cook outdoors and share with your family and friends.

Eliminate Mortgage Insurance

June 23rd, 2015

Why would you consider refinancing if your mortgage is only two or three years old and the rate is not considerably higher than what is currently available on new loans? Because you may be able to eliminate the mortgage insurance and have significant monthly savings.


Many homes have seen their values rise in the past few years. The current loan-to-value ratio may be low enough to no longer require mortgage insurance. In some cases, a homeowner might actually pay a little higher rate than they currently have but lower their monthly payment dramatically because the mortgage insurance isn’t required.

A rough rule of thumb is that mortgage insurance is not needed on loans at or less than 80% of value. There could be programs available that would allow a higher LTV than 80%.

Careful consideration should also be given to the fees required to refinance. Lenders differ in not only the rates they charge but also the fees associated with the loans and the process. If you’d like a recommendation of a trusted mortgage professional, we’d be happy to make a recommendation.


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August 7th, 2014

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April 23rd, 2013

Builders Plan Multi-family Homes

March 3rd, 2013






Viewed from the street, the single-family home at the entrance to Lennar’s Traditions at Bella Casa community looks just like any of the homebuilder’s other models. Until you spot the second door.
From the home’s porch, visitors have the choice of entering into the main home or a side door that leads to a 500-square-foot suite. The suite, which has all the amenities of a
second private residence, is the latest—and most emphatic—attempt by a Triangle homebuilder to appeal to a growing demographic of buyers: those with multiple generations
of family members living under one roof. Lennar calls this its “Next Gen” house. The Miami-based builder is now offering the model at subdivisions in Apex and Clayton, N.C., after having success selling it in western states such as California, Arizona and Texas.
“We market it as two homes, one payment,” says Trish Hanchette, Lennar’s Raleigh division president.
The idea of designing a home to appeal to a larger, multigenerational family is not a new one. But in the past, the plans were designed more to appeal to buyers from cultures where
having multiple generations living together was expected. The market for such homes has expanded in recent years as economic factors and
demographic shifts have reshaped the nuclear family and altered its housing needs. The severity and length of the economic downturn has created a need for what the housing
industry calls “bounce back” rooms, meaning space for adult children struggling to make it on their own.
“The number of 22- to 30-year-olds that are still living at home is at a record high right now,” says Hampton Pitts, an executive vice president with Ashton Woods Homes, an Atlantabased builder that is active in eight North Carolina communities. “So you have that college graduate that’s back at home looking for a job and maybe got their first job but not ready to be in an ownership or rent situation.”
Meanwhile, the country’s baby boomer generation is entering old age — and living longer — just as the cost of health care is skyrocketing.

“Assisted living is very expensive, and it cuts into any savings that folks have,” Hanchette says.
That Lennar has decided to offer its Next Gen model in North Carolina is a sign that the homebuilder doesn’t believe the move toward multigenerational housing will slow once the
economy picks up. The region is an attractive place for such a product in part because it is so appealing to retirees — in many cases, a young family will move to the state and be followed
several years later by parents eager to be close to their grandchildren. Terri Aves, a real estate agent in Cary, N.C., recently represented a buyer who bought a new home in Bella Casa, though not a Next Gen model. The owners moved here from the Northeast and specifically wanted a plan that had a first floor guest room that could be used when their aging parents came to visit.
“Over the years, I’ve had a few clients, but I’m seeing it increase,” Aves says of such requests.
Like most housing trends, the move to more multigenerational floor plans started at the very upper end of the market.
“In the higher-end homes, probably starting four years or maybe five years ago, you really improved your ability to sell that home with a first floor bedroom,” says Rich Van Tassel of
the Raleigh-based Royal Oaks Building Group. “Now every home we build that’s over
$500,000 is going to have a first floor bedroom and full bath, in addition to a study.”
Royal Oaks went so far as to offer some models with two master suites — one downstairs
and one upstairs — but Van Tassel said they didn’t sell well.
“Whenever we did that, we found we really narrowed down our buying pool,” he says.
Now the company focuses on offering space that can be used in multiple ways — as a
nursery, an extra bedroom or a home office. Ashton Woods has also woven a flexible first-floor space into its floor plans to appeal to
buyers who are expecting to eventually have long-term guests.
“The flexibility in our architecture to create secondary suites for those situations is really important to have,” Pitts says.
At the company’s Leesville Crest community in North Raleigh, Ashton Woods is offering a new 4,880-square-foot model with a guest suite that comes with a kitchen, family room and
bathroom. Other plans feature a separate one-car garage with an entry off that into a private suite.
Lennar is hoping to distinguish itself from the competition with Next Gen.
“This expands it, in that there’s a lot more privacy involved in the space,” Hanchette says.
The Next Gen model in Bella Cassa contains about 3,700 square feet and sells for $414,000. (Other Lennar models offered within the subdivision range from $250,000 to $375,000 .)
The common areas in the main house of the Next Gen model are larger than they would typically be to accommodate extra people. In addition to the second entrance, there’s also a
door inside linking the main house to the attached suite. Since Lennar unveiled the model in October, it has made one pre-sale and is building two others on spec.
Sales associate Billie Block represented the pre-sale buyer. The family knew they were going to have a parent come and live with them, and the other models available didn’t quite have
the convenience and privacy that the parent wanted .
“We were really struggling to find something,” Block says.
Hanchette says Lennar doesn’t expect to build entire communities of Next Gen homes, but rather to have them mixed in with more traditional plans. As for how large the buyer pool is
for such a house, Block says the jury is still out.
“It’s so early that I think it’s going to be really hard to tell at this point,” she says. “But honestly, I think it’s a product whose time is here.”




©2013 The News & Observer (Raleigh, N.C.)

Distributed by MCT Information Services

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Improve your credit score

February 28th, 2013