The Guaranteed Rural Housing Program, sometimes called “the USDA loan” will be implementing procedural changes in the upcoming months. On October 1st, 2011, they will be lowering the USDA fee (this is the financed fee that gets added to the loan) from the current 3.5% back to 2% for new applications. Effective with this change will be adding an annual fee equal to 0.3% of the outstanding balance of the loan. So, what’s that mean to your pocketbook?
They’re lowering the up-front (financeable) fee back to the 2%, BUT adding an annual fee of 0.3%. This is similar to how FHA does their fees. This creates a more consistent stream of income on these loans to keep the program funded. Here’s an example of how this plays out:
Previous Scenario:
New Scenario:
Up front cost difference: $2,550 (lower)
Monthly payment difference: $30 (higher)
Not a huge difference either way but every penny counts! If you’d like to learn more about the USDA loan and how it can serve you, let us know. We know several great mortgage lenders who are well versed in this type of loan. The USDA loan is still one of the best (and last!) 100% financing programs available.
Information provided by Steve Valenta of Pinnacle Mortgage Planning.
There’s been a bit of buzz in the news lately asking if it’s cheaper to buy a house than to rent a house in today’s real estate market.
I ran the numbers on specific and current listings in our Clark County market to answer that question. These specific scenarios are based on FHA financing, 640+ credit score, with 3.5% down at 4.50% 30 year fixed rates. I ran monthly rent payments of $800, $1,000, $1,200 and $1,400. I think you’ll be pleasantly surprised with the data!
If you pay monthly rent of $800 per month… Then you could afford to purchase a home at $115,000 with $4,000 down payment. P&I $567.87, Taxes 125.00, Homeowners Insurance 30.00, Mortgage Insurance 82.00, Association Dues 0.00. Estimated Monthly Payment: $804.87
If you pay monthly rent of $1,000 per month… Then you could afford to purchase a home at $145,000 with $5,000 down payment. P&I $716.07, Taxes 140.00, Homeowners Insurance 30.00, Mortgage Insurance 104.00, Association Dues 0.00. Estimated Monthly Payment: $990.07
If you pay monthly rent of $1,200 per month… Then you could afford to purchase a home at $175,000 with $6,100 down payment. P&I $864.22, Taxes 175.00, Homeowners Insurance 30.00, Mortgage Insurance 127.00, Association Dues 0.00. Estimated Monthly Payment: $1,196.22
If you pay monthly rent of $1,400 per month… Then you could afford to purchase a home at $200,000 with $7,000 down payment. P&I $987.68 Taxes 210.00 Homeowners Insurance 40.00 Mortgage Insurance 145.00 Association Dues 0.00. Estimated Monthly Payment: $1,382.68
Information courtesy of Steve Valenta at Pinnacle Mortgage Planning.
Mortgage interest rates have been pretty attractive for a long stretch of time. So long, in fact, that many homebuyers and homeowners might not realize that rates haven't always been this low. Mortgage interest rates in the 4-percent range were unheard of until 2010, and rates in the 5-percent range were unknown prior to 2003, according to Bankrate.com surveys through the years and a chart of monthly average mortgage interest rates tracked by the Federal Reserve since 1971.
Prior to 2003, higher mortgage interest rates were the norm. In the early 1970s, rates hovered in the 7-percent range and spiked up above 9 percent in late 1975, late 1976 and most of 1978. At the end of the decade and throughout the 1980s, mortgage interest rates rarely dipped lower than 10 percent.
In the early 1980s, mortgage interest rates brushed the stratospheric highs of 18 percent and even 19 percent. Imagine trying to get a home loan with an interest rate of 18 percent. At that rate, the mortgage interest deduction would be a very lucrative income tax perk, but the monthly payment on a loan would be far more painful than a typical mortgage payment today.
During the 1990s, mortgage interest rates ranged from around 7 percent to roughly 9 percent for many years. It was only in 2000 that rates began to fall to earth. They held at less than 9 percent in 2000, less than 8 percent in 2001 and less than 7 percent in 2003.
Mortgage interest rates are an important factor in many major financial decisions. When rates are low, it can be a good time to buy a home or refinance an existing mortgage. When rates are high, it can be smart to pay off your mortgage. Rates should also be considered when deciding whether to refinance from a fixed rate to an adjustable-rate mortgage, take out a second loan or tap a home equity line of credit.
Original article by Marcie Geffner on Bankrate.com. Read it here.
Buying a first home is an exciting time for many of us. That pride of home ownership plus the freedom of decorating however we'd like is a liberating feeling. Once you own a home, there's no more worrying about the landlord and whether you can paint that ugly pink kitchen, hang new curtains, or (gasp!) put nails in the walls.
Home ownership does come with a different set of worries, unfortunately. Unlike a rental where the landlord takes care of regular maintenance issues, keeping a house safe from hidden threats is a homeowner's responsibility. Here are just a few of the hidden threats we've uncovered in our home over the years; the list might surprise you.
1. Clogged dryer exhaust ducts. Dryer lint will catch fire very easily, which is why regular vacuuming of the dryer's exhaust system is a must. What many people aren't aware of is that dryer lint can also accumulate and possibly ignite in the exhaust ducting under the floors or behind the walls. To remove lint buildup in these ducts, a DIY dryer duct cleaning kit can help clean those hard-to-reach areas.
2. Dirty chimneys. It wasn't until our chimney flue exploded in flames that we learned how important it was to have chimneys cleaned out at least once a year. Burning wood in the fireplace releases a black, tarry substance called "creosote" which sticks to the chimney walls. If the creosote is allowed to build up, a floating ember is all it takes to set off a fire.
3. Mice droppings. If your new home is an older home or one that has been vacant for awhile, be extra careful when sweeping out piles of mice poop. Deer mice droppings can transmit the deadly disease known as Hantavirus which is breathed in along with all that stirred up dust. To avoid exposure to Hantavirus, wear latex gloves and a HEPA face mask, and wet down the floor before cleaning.
4. Water heaters. Water heaters are usually set to high temperatures so that a family can enjoy plenty of hot water. Those higher temperatures can also cause accidental burns, especially in young children. Lowering the temperature of your water heater to 120 degrees will prevent scalding burns and lower energy costs as well.
5. Lead paint. Back in the "old days", some types of household paint contained lead for extra sheen. For homeowners, sanding and scraping off this old paint can generate lots of lead-tainted dust which is both an environmental and health hazard. If your new home was built before the 1970s, check with your city's Hazardous Waste office first to learn the safe way to prep an old house for a new paint job. Personal note: Washington State requires a "Lead Based Paint Disclosure" prior to selling, buying, or renting a home built prior to 1978.
6. Radon gas. One out of 15 homes in the United States has high levels of cancer causing radioactive Radon gas which originates from the uranium found naturally in the soil. Testing for Radon is something you can do with a DIY testing kit. Fixing the problem however is best left to the professionals. Personal note: Radon comes and goes so testing will only show what's present then, not what may happen in the future.
7. Bad DIY wiring. When we had the wiring updated in our home several years ago, the electrician discovered that an early owner had wired the house himself, using braided cloth extension cords. Before buying an older home, a home inspection by a certified inspector will catch a so-not-to-code wiring job and other unsafe DIY improvements.
8. Carbon monoxide poisoning. Carbon monoxide is an odorless, colorless and flammable gas that is poisonous to humans and their pets. CO gas can build up from a faulty gas furnace or oven, a camp stove or even a chimney. Fixing the escape of CO gas into your home is a job for the professionals, but an easy (and cheap) DIY task for a home owner is to install CO alarms throughout the home.
9. Icicle buildup on the eaves. If you are a southerner that has recently moved to the cold north, icicle buildup is one of those hidden hazards that people don't often think about. Melting icicles can drop from the eaves and cosh anyone who happens to be standing around. To avoid injury from dropping icicles, it's best to knock these things off with a shovel first even though they look pretty cool.
10. Squirrels. Attic dwelling squirrels love to nibble away at all that yummy electrical insulation which increases the risk of home fires. To prevent squirrels from entering your attic, check the roof and eaves periodically for signs of gnawing. Open areas should be repaired with a bit of steel mesh after the squirrel has been trapped. Personal note: A squirrel got in my attic once and it took two weeks to catch it. In that two weeks it did $10,000 worth of damage to the beams supporting the roof!
Original article: by AC, on Thu Aug 19, 2010 8:47am PDT
Labor Day looms large for homeowners. The end of summer signals that many of us will soon be immersed in an accelerated work schedule plus soccer practices, homework and other realities of back-to-school season. (Then there are football-filled Sundays that most cut into your handyman time in the fall.) But there's still time to tackle a few remodeling projects. And while your goal may simply be to freshen the appearance of your home, you also want to know that your hard work will increase your home's value.
Here are eight home improvements you can finish by Labor Day that will pay you back. Each costs less than $1,000 and should require less than a day’s work.
1. Replace Sinks & Faucets Estimated Price: Sink $400 & Faucet $150 For home buyers, “the kitchen is king,” says Paul Cardis, chief executive of Avid Ratings, which conducts an annual survey of more than 20,000 first-time home buyers to determine design preferences. “For those looking to spruce up their house, the kitchen is the place.” You can replace a kitchen sink and faucet yourself in a matter of hours.
Be sure to seek out low-flow faucet aerators that can reduce water usage by 30%. (Energy-efficient features, specifically, are a “must have” or are “really wanted” by 88% of home buyers these days.) You can expect to recoup 70% to 80% of the cost of kitchen-remodeling work when you sell your home.
2. Backsplashes Estimated Price: $14 per 12 in x 12 in tile The easiest way to add pizazz to your kitchen is with a new backsplash. You can go from country to modern in a snap with a variety of options for finishes and colors. To save money, time and frustration, consider the peel-and-stick tile options now available. “They’re aesthetically pleasing and will do the job if that’s all you can afford,” says Fredda Weisbard, a real estate agent at Coldwell Banker in Boca Raton, Fla.
“It’s an inexpensive Band-Aid for updating your kitchen.” The messier grout-and-tile approach will add $50 to $100 more in related supply costs but will appeal more to prospective buyers.
3. Vanity Cabinets/Toilets Estimated Price: Vanity $200 and Toilet $250 Even relatively minor updates to your bathroom can produce a return on investment of 172%, according to HomeGain.com’s 2009 Prepare to Sell survey of 1,000 real estate agents nationwide. Because toilets fit neatly over existing plumbing, they’re surprisingly easy to install. Look for modern water-saving models that will both save on your water bills and appeal to energy-conscious buyers when it’s time to sell.
If you’re feeling creative, save hundreds of dollars by using an old dresser as the foundation for a new vanity. Simply cut out room on the top to hold a basin sink and to connect pipes.
4. Paint Estimated Price: $30 per paint can It’s amazing what a fresh coat of paint will do to immediately transform any room in your house. Keep in mind that lighter shades generally make a room feel larger; neutral shades will appeal most to potential buyers. “Buyers won’t be able to look past [bold] colors and see the rest of your home,” says Weisbard. You’ll earn a 250% return on your investment in freshly painted interior walls, according to HomeGain.com’s survey.
Just be sure to test colors -- Home Depot sells 8-ounce sample cans of paint for $3 -- before buying the full batch of paint needed for the room. Limit costly mistakes and spills by splurging on drop cloths and painter’s tape.
5. Crown Molding Estimated Price: $5 per linear foot Crown molding in your home compared with none in a similar home in your neighborhood could make a difference when it’s time to sell. “You may not get the money back, but it’s a feature that most buyers appreciate when looking for a home,” says Weisbard. “It’s a wow-factor feature. It stays in buyers’ minds.”
Fair warning: Installing crown molding might be the trickiest task on our list. There’s a lot of geometry involved -- along with a nail gun and a miter saw. Follow the “measure thrice, cut once” rule to limit waste.
6. Storage/Organization Estimated Price: $20-$500 Improvements to a home's functional space can be just as valuable as ones that make a home look better. Potential buyers like to assess space and storage area for their belongings when evaluating new houses.
Focus your efforts on the garage, basement and closets, where you can declutter easily with clear storage bins or new shelving.
7. Replace The Front Door Estimated Price: $150-$500 As the first thing prospective buyers will see upon entering your home, a new front door will more than recoup your investment. Expect a fat 129% ROI on a steel door, according to Remodeling magazine’s 2009–10 “Cost vs. Value Report.” (Note that fiberglass models, which can cost three times as much, recoup only 65% of their cost.)
Bonus: Buy a qualifying energy-efficient door and reap a tax credit of 30% of your cost (up to a maximum of $1,500 in 2009 and 2010 combined).
8. Landscaping Estimated Price: $300-$400 Before your visitors (and prospective buyers) even get to the door, they’ll see the front yard. It’s a critical first impression that can change the way they view the entire house. “If the outside of your home isn’t appealing, then what does that say about the inside?” Weisbard says.
Go for plants -- whether they line your walkway or the front of your house -- that add color and complement your house, suggests Bruce Butterfield, market-research director of the National Gardening Association. “People react to color emotionally.” Perennials will require less maintenance year to year, and hydrangeas in particular -- Butterfield recommends the “Endless Summer” variety -- will give you several months of blooms each year. You can pick them up for about $50 each, compared with $150 or more for a new tree, which will take much longer to mature.
Original article by John Miley at Kiplinger.com, August 20, 2010.
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