Should I Rent or Should I Buy?

Buying vs. Renting Comparison

The chart below shows a cost comparison for a renter and a homeowner over a seven year period.

The renter starts out paying $800 per month with annual increases of 5% The homeowner purchases a home for $110,000 and pays a monthly mortgage of $1,000.

After 6 years, the homeowner’s payment is lower than the renter’s monthly payment.

With the tax savings of homeownership, the homeowner’s payment is less than the rental payment after 3 years.

 

Rent chart

What is an Assumption? How Can it Benefit Me?

ASSUMPTIONSNot many buyers have assumed a mortgage in the past 25 years. Most people think it was because FHA and VA in the late 80’s began to require that buyers qualify for the assumptions. Not having to qualify for a mortgage would certainly benefit certain buyers.

If a homeowner must qualify for an assumption like a new loan, they’ll generally choose the mortgage with the lower interest rate.  Over the past 25 years, rates have been trending down but it appears that rates have bottomed out and will gradually increase.   As they continue to rise, the lower rates on the FHA and VA loans created in the last few years will appeal to buyers even if they do have to qualify for the assumption.

There are significant advantages to assuming one of these government insured mortgages if the current interest rate on a new loan is higher:

1. Mortgage is further into amortization schedule
2. Lower interest rate loans amortize faster than higher interest rate loans
3. Lower closing costs than a new mortgage
4. Easier to qualify than on a new mortgage
5. No appraisal required

FHA assumptions are only allowed as owner-occupied residents. The borrower must meet current FHA guidelines for borrowers. The total debt ratio including house payment to be assumed cannot exceed 41% of borrowers’ monthly gross income.
VA loans are also assumable with buyer qualification. However, in order for the veteran Seller to have their eligibility reinstated, the buyer must also be a veteran with eligibility.

A 1% difference in the current rates and a lower assumable mortgage rate begins to make it very attractive to assume a mortgage. When the differential becomes even greater, assumptions will become more prevalent than they’ve been in over twenty years.

AC Filters….The Hidden Truth

filter

 

The benefits of regularly changing the heating and air-conditioning filters are obvious to homeowners; the real challenge is creating a system to make sure it gets done.

A reasonable schedule would be to replace it with a new one-inch pleated filter every 60-90 days. Households with shedding pets should consider replacing them every month. Some people change their filters every month when they pay their electric bills. A simple system would be to set a recurring appointment on your calendar like Outlook or Google.

Filters trap dust, mold and bacteria which can directly affect the air quality and play havoc with your allergies. When a filter is dirty, it prevents proper airflow and allows dust, dirt and allergens to blow through your home. Changing your filter regularly helps to avoid maintenance, improves equipment life and produces increased energy savings.

When shopping for filters, it’s understandable to look for the best bargain but the cheapest price may not be the best choice. When purchasing, recognize that HEPA-rated and HEPA-type filters are not the same thing. HEPA stands for high-efficiency particulate air. A HEPA filter meets or exceeds standards for efficiency set by the U.S. Department of Energy. Most HVAC contractors recommend HEPA filters.

Some filters need to be changed monthly and other types have manufacturer recommendations of every three months. An alternative to disposable filters are the permanent, washable types. These will cost more initially but because you can clean them and re-use them, eventually, you’ll recapture the cost and realize savings.

Thinking About a Career Change?

Have you been thinking about a career change and owning your own business? Do you enjoy working with people, would love to help others achieve their real estate dreams, and want a flexible schedule? Have you ever considered a career in real estate?

If you’ve answered yes to any of these questions, join us tonight at noon  (Jan. 21) for a free real estate career seminar at our Keller Williams office in Lafayette. There, you’ll learn about the requirements for starting a business in real estate and what we offer to our associates at Keller Williams Realty.

career change

Starting a business in real estate, as a Realtor, is fairly simple, quick, and inexpensive compared to the costs of starting other types of businesses. Truth is, real estate is probably one of the lowest cost start up there is. Obtaining your license and paying the initial fees for the first year will run you about $1500. Maintaining your license afterwards with all the mandated fees will costs you around $1500 per year. What other kind of business can you start and run for this kind of money? And when it comes to income, the sky is the limit; you can build it as small or as large as you envision it. Really.

Keller Williams is looking to hire and train a select group of motivated Realtors. If you are looking to build a career in real estate, or looking to take your existing career to the next level, there is no better place to do so than the #1 Real Estate Brokerage in North America. At Keller Williams, our mission is to build careers worth having, businesses worth owning, and lives worth living. We can teach you the ins and outs of building a successful real estate business, and we offer the tools of the trade that will get you there. No experience necessary; We will train you!

For more information, visit my redcareers website here on contact me via email with your questions.