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Want To Own Your Home Free And Clear? 7 Ways To Pay Off Your Mortgage Early

There was a time when taking out a mortgage on a house meant you actually planned to stay there long enough to pay it off and own it outright. In many cases, people bought homes, raised their families, retired, and then passed this valuable asset down to their kids. But, largely, this is not the case anymore. The most recent National Association of REALTORS® 2016 Profile of Homebuyers and Sellers shows that homeowners stay in their houses an average of 10 years – which seems like a lot when you consider how many people move up to a larger home as their family grows, move away for job transfers or other employment issues, or take the equity and run to something better after just a few years.

But that doesn’t mean it doesn’t make great sense to pay off your mortgage early, which can save you many thousands of dollars. “Topping the list for most folks in the ‘Pro’ category is peace of mind,” said The Balance. “Plain and simple, you don’t have to worry about a mortgage payment, and you know you’ll always have a roof over your head if, for example, you lose your job. For a lot of folks, knowing they’re not paying their hard earned money to the bank in the form of interest is also a plus. But freeing yourself from a big mortgage payment also gives you more financial flexibility to do other things.”

Here are seven ways to go about it.

1. Make an extra payment per year

Making 13 payments instead of 12 in a year can save you thousands and shorten your loan. “One way to pull off this tactic is to save 1/12 of a payment every month, and then make an extra payment after every 12 months,” said Bankrate. “Let’s say you do this starting the first month after getting a 30-year mortgage for $200,000 at 4.5 percent. That would save more than $27,000 interest, and you would pay off the mortgage four years and three months earlier.”

You can accomplish the same thing by changing when you pay your mortgage. Instead of making one mortgage payment per month, split it up into two. “A bi-weekly mortgage payment program is meant to short-circuit your loan’s amortization schedule,” said The Mortgage Reports. Instead of taking 12 payments per year, the bi-weekly payment plan asks for one payment every two weeks, which adds up to 13 payments per year. With each ‘13th payment,’ your loan balance is reduced by the entire amount of the payment. You reach your loan’s payoff date sooner.”

2. Make an extra payment each quarter

Want to be a little more aggressive than that about getting your mortgage paid off early? “Make an extra house payment each quarter, and you’ll save $65,000 in interest and pay off your loan 11 years early,” said Dave Ramsey – an example that’s based on “the average $220,000, 30-year mortgage with a 4% interest rate.

3. Refinance

It may sound counterproductive to add to your mortgage balance while your goal is to lower it, but, depending on your existing interest rate and the new one you could get, it might be a great move, especially if your closing costs are low. Remember, though, that, while your monthly payments will drop and you will save money on all that interest you don’t have to pay, “It won’t accelerate your pay-off date,” said Forbes. “(In fact, it may extend that date even further out into the future.) Refinance into a 30-year mortgage with a lower rate, and then continue making the same monthly payment that you were previously making. This ‘extra’ money (the gap between your new, lower monthly payment and your original monthly payment) will get applied to the loan as an extra principal payment. And this will accelerate your payoff date.”

Or…

4. Refinance to a 15-year loan

As long as you’re refinancing with the goal of paying your mortgage off sooner, switch from a 30-year to a 15-year loan. By refinancing that same $200,000 loan at 4.5 percent into a 15-year loan at 4 percent, you can pay off the mortgage “10 years earlier and save more than $60,000,” said Bankrate.

5. Get rid of PMI

Refinancing is also a good idea if you’re looking to lower your payment – and apply the savings toward your mortgage balance – by removing your PMI. “If a home was purchased with less than a 20% down payment, the bank is probably charging PMI,” said Mortgage Calculator. “However, once the borrower owns 20% of the home, this charge could be eliminated.”

6. Apply any windfalls

Get a raise? A bonus? A surprise cash gift? Instead of taking that vacation or putting it into your savings, apply it to your mortgage balance. “A $10,000 lump sum payment on that 30-year, fixed-rate mortgage for $200,000 at 4.5 percent “pays off the mortgage two years and four months earlier, and saves more than $19,000 interest,” said Bankrate.

7. Save those pennies

They do add up, especially if by “pennies” you mean dollars. If you apply the same saving techniques toward paying off your mortgage as you did to get your down payment together, you should be able to carve away at the total owed. Even an extra

$100 a month toward your principal can save you more than $30,000 in interest over the life of your loan – or more, depending on your interest rate and mortgage total.

One of the easiest ways to chip away at your mortgage is to simply “round up your payments so you’re paying at least a few extra dollars a month,” said Dave Ramsey.

Think Your Credit Score Is Too Low To Buy A House? Maybe Not

When it comes to your credit score, how low is too low? The number you really need to buy a house.

We all know that when it comes to buying a house, there are a few things we need, like a down payment and a good enough credit score to qualify for a loan. But what does a “good enough credit score” really mean? Does your credit history have to be impeccable? Can you have a couple of boo-boos? And, if you do have issues on your report, how much of a hit will you take?

Your credit score is “a number, roughly between 300 and 850, that summarizes a consumer’s creditworthiness,” said Bankrate. “The higher the score, the more able and willing a consumer is to repay a loan, lenders believe. The best mortgage rates and terms go to borrowers with credit scores of 740 and higher.”

But most of us can’t measure up to that number. Thankfully, we don’t have to. There’s room for lower scores – even really low scores – depending on the type of loan you’re applying for, with a number of other factors (your income and work history, the amount of your down payment, the state of the economy) thrown in. Knowing where the bottom is will help you figure out how to proceed.

FHA loans

The advantage to a Federal Housing Administration (FHA) loan for many buyers is the low down payment. You may need only 3.5% down to purchase a home with this type of loan, which is backed by the government. But, you’ll need a minimum 580 credit score if you’re only planning to put 3.5% down. Can’t meet that benchmark? You’ll need more cash up front.

“If your credit score is below 580, however, you aren’t necessarily excluded from FHA loan eligibility,” said the FHA. “Applicants with lower credit scores will have to put down a 10 percent down payment if they want to qualify for a loan.”

For FHA loans, your credit score can be as low as 500. But, “Those with credit scores between 500 and 579 are limited to 90 percent LTV,” which leaves a lot of people out of luck.

Non-government-backed loans

The issue with FHA loans for many buyers: That pesky private mortgage insurance (PMI), which can add several hundred dollars to the monthly payment and is “required any time you put less than 20% down on a conventional loan,” said My Mortgage Insider.

If you have a larger down payment, you may be able to avoid paying PMI by going with another type of loan – but only if you have the credit score. “To qualify for a conventional mortgage, a borrower generally needs a minimum credit score of 680 and at least 5 percent down,” said Bankrate. “Many lenders require at least 10 percent down.”

There may be more wiggle room in that credit score if you can come up with more money for a higher down payment. But, if it’s too low, you’ll likely be pointed right back to FHA loans. On the other end, a higher score will get you the best possible interest rates.

Subprime mortgages

Have a credit score below 500? You’re officially in the “bad credit” zone. But, you may still be a candidate for a loan, even if you can’t qualify by FHA standards, by going with a subprime mortgage. The word “subprime” still sends shivers down the spines of many people because loans extended to what many industry professionals considered to be unqualified applicants were largely blamed for the last housing crash. Accordingly, many of these opportunities dried up in the aftermath.

Today, though, subprime mortgages are available. Keep in mind that minimum credit scores will depend on the individual loan and lender, and each borrower’s unique set of financial circumstances. And, you’ll pay for the privilege of being extended a loan with higher rates and/or fees.

“Subprime mortgage lenders mostly use collateral like equity earned when considering a ‘refinance’ or a more significant down-payment when talking about a ‘purchase money’ transaction,” said First Time Home Financing.

Private Money Lenders

If all other avenues fail, you may still be able to get a loan with your bad credit from a private money lender. These are individuals with money to spend who are looking for investments. Because your low credit score makes you risky, you’ll be charged more for your loan.

“Your personal credit is usually a smaller factor in these types of loans. However, you should know that the interest rate on these loans is much higher – in the range of 10-15%,” said First Time Home Financing. “If you really have bad credit, this could be your only option for the time being.”

We currently work with lender who can offer these loan program and we would be happy to put you in contact with these lenders so you can qualify for mortgage financing. Please CLICK HERE for additional information about these loans or give us a call at 480-213-5251.

Three Things Home Buyers Should Never Do

Misunderstandings, problems, or shortcomings in the buying process many need correction to end negative results. This is not about blame, but learning how to proceed constructively:

  • Buyers who begin homeownership out of their financial depth are not on the path to success or happiness. Sticking to your budget is not losing out, but progressing sanely.
  • Research-savvy buyers, who ask questions and uncover deal-breaker property weaknesses will not end up as extremely-disappointed property owners faced with expensive problems to correct or law suits to fight.
    Home buyers will be rewarded by remembering that there are three things never to forget when buying real estate:

#1: Never quit: Real estate values continue to rise — rarely getting cheaper. Give up and you end up with nothing. If you quit, you’ll join the ranks of those who spend the rest of their lives talking about the real estate that got away. I’ve heard so many stories about properties that people almost bought or always wanted to buy. When I ask what happened, they usually don’t know. Many say they just gave up. “I guess it was not meant to be” is a common answer. Don’t let this be you. If you’re losing out on offers, find out exactly why.

  • Most sellers care about who buys their home and will make new memories there. Personalize your offer with a video or unique offer. One enterprising chef offered to come and cook dinner for the owners once the offer was accepted. A couple’s short, punchy video showed what they had gone through to find that house and what they dreamed about doing there… all with magazine pictures cut out by their kids. You may not be creative, but be sincere with a letter or short video (less than a minute or two) that your real estate professional can use to introduce you and your offer to purchase.
  • The real estate market may change as you continue shopping. If prices rise, you may end up in the wrong price range. Explore other locations and types of housing. Buying a two- or three-unit income property may give you the financial leverage you need for the area you prefer.
  • Your relationship with your real estate professional may not be working to your advantage. What’s missing? Is it time to quit that relationship, not the buying project?

#2: Never rely on verbals.: Verbal assurances from sellers, home inspectors, or real estate professionals are worth the paper they are printed on! In real estate, it’s what’s on paper that counts[&mdash]what you can rove indisputably in a disagreement or in court.

  • Sellers may say they’ll leave all the appliances, playground equipment, or anything else. If you really want something, include it in the offer with a description that precludes substitution with lesser models.
  • The real estate professional may assure you about many things the sellers will do or not do before closing. If something matters to you, make sure it is written into the offer, so there is no doubt what will be done, to what standards, when, and at who’s cost. Repairing the roof, finishing the bathroom renovation, cutting deadwood out of tall trees…all in writing in the offer.
  • If there’s something of specific value to you on the property, make sure it will remain intact. For instance, a stand of trees was assumed by one buyer to be a permanent fixture. The sellers thought that, since they’d grown the trees, they could harvest the trees as firewood as part of packing to move. What did the offer say on the subject?
  • The builder’s sales staff want to expedite your new home sale, but they may not have the power to make binding promises, warranties, or guarantees. Be sure you get the home you expect, by having details that matter to you written into the offer. Read the entire offer[—]yes all the small print. If you can’t follow the clauses, ask your real estate professional. Translating legalese for clients is a prime function for these professionals. Check important issues and clauses with your real estate lawyer. If you only want the house if it has a three-car garage, not a two-car, it’s vital to get that commitment from the builder into the offer in the correct way to overcome any sidestepping made allowable by the small print.

#3: Never think the work is over once the offer is accepted: Having your offer to purchase accepted is terrific! Hurrah! However, until closing, the house belongs to the seller and a lot can happen.

  • The seller is responsible for insuring the property and keeping it in good repair until closing.
  • Will the lender have all the mortgage funds ready for you on closing?
  • Both sides of the transaction need their lawyers tidying up loose ends. You’ll be busy with movers and perhaps school transfers.

Things can go wrong. I’m not trying to stress you out, but keep in touch with your real estate professional to be sure they are in touch with those finalizing the many details that must be resolved before closing. That’s not calling everyday in a panic. Clarify what details must be taken care of before closing. Then check off that list with your real estate professional, so nothing is left to the last minute. Once you get the keys and move in there may be carryover issues. Remain calm. Document the issues. Never quit until issues are completely resolved. Never rely on verbal assurances. Insist on written sign-offs, warranties, and receipts.

Phoenix Real Estate Market Report ~ April 2017

The current real time market profile shows there were approximately 10,513 new listings (down 1,678 listings from last month) on the market in April 2017 and 9,365 sold transactions (down 532 listings from last month). The overall inventory of homes on the market in April 2017 is 21,806 homes (down 440 listing from last month) which is down -16.4% as compared to the number of home on the marker in August 2014. In April 2015 there were 24,965 homes, in April 2014 there were 29,308 homes and in April 2013 there were 20,275 homes for sale on the market. Due to the large spike in the number of sold transactions and the decline in average days on market this shows buyer’s demand is strong where inventories may continue to be low and drive up prices.

Since November 2016 after our new president took office the average sales price has increased from approximately $281,000 to $292,500 or an appreciation rate of 3.5% in 6 months. In March we saw a 43.2% increase in the number of sold transaction in one month but this month the number of sold transactions are down 532 or -5.7%. The number of sold transactions usually increases from March until June but we will have to see next month if this will be the beginning of a new trend as evident of a decrease in buyer demand or ability to buy. Since April 2016 (12 months ago), the average sold price has increased +3.5% (up from last month), the average days on market has decreased approximately -2.6% (down from last month) and the number of sold transactions has decreased approximately -0.1% (down from last month).

The volume of foreclosure purchases since April 2016 (12 months ago) has decreased approximately -17.0% and the volume of short sales decreased of approximately -38.1%. Since April 2013 the number of foreclosures have decreased -545.7% and the current percentage of foreclosure sales is only 2% of the market which indicates a healthy market. Also, since April 2013 the number of short sale transactions have decreased -1,076.9% and the current percentage of short sales sold is only 2% of the market. Unfortunately, some homeowners who bought between 2005 and 2007 are still up-side-down as shown in the annual average sold price chart above.

Since April 2016 (12 months ago), the number of homes for sale on the market have decreased approximately -12.2% or 24,840 homes for sale on the market to a gradual decrease of 21,806 homes (Down 440 homes from last month). The total number of listings is low as compared to 29,308 listings in August 2014. This decrease in the number of homes for sale indicates we are currently in a seller’s market (low supply and increased demand).

Real estate prices are still relatively low (near 2008 prices), interest rates are planned to increase in 2017 and the macroeconomic market is improving both in terms of prices and the overall economy. Give us a call to discuss your best buying or selling strategy, TODAY!!

Position Realty
Office: 480-213-5251

Smart Landlord Policies for Pet-Friendly Property Rentals

Want a surefire way to increase tenant demand for your rental? Take down the No-Pets Allowed sign.

The decision about whether to allow pets is a tough one for many owners, and there are no right or wrong answers. But some surveys show that nearly 75 percent of renters own pets. That’s a huge pool of potential tenants to turn away.

Tenants who find a welcoming home for Fluffy are also more likely to stay longer, which can reduce vacancy time. For owners renting their property as an investment, being pet-friendly makes good business sense.

But allowing pets isn’t always the right answer for owners renting out a home they plan to return to. For owners who have pets themselves, allowing renters to keep a cat, dog or goldfish will likely make leasing the home faster and easier. For those who haven’t had pets, keeping the rental pet-free is a reasonable choice.

According to a recent survey by Apartments.com, 9 out of 10 renters said deciding where to live hinged on the landlord’s pet policies. Seventy-two percent of renters said they owned pets.

Protecting Your Property When Allowing Pets

How can you avoid the dog that barks day and night and chews the cabinets, or the kitty that favors the closet floor over a litter box? Finding responsible pet owners is key to protecting your property and neighbors’ sanity.

The Humane Society suggests that landlords check references on both the tenant and their animal, including calling prior landlords, the veterinarian and neighbors to ensure the animal behaves and won’t cause serious damage.

The organization suggests owners limit the number of pets allowed in each unit and approve pets on a case-by-case basis, rather that create limits based on size or breed. The Humane Society recommends creating a pet policy that outlines acceptable pet behavior and requires that all pets be licensed, up-to-date on vaccinations and spayed or neutered.

Deposits and Fees

Beyond policies, landlords often charge extra deposits, fees or pet rent to limit risk and cover the cost of additional cleaning or wear and tear animals can cause to the unit, building and grounds. In the Apartments.com survey, nearly 80 percent of renters said they had to pay a fee or deposit for pets, with more than half paying $200 or more per year.

Be aware of what’s customary in your neighborhood plus local laws when deciding how much of a fee or deposit to charge.

Preventing Mold Overgrowth and How To Prevent It

Mold problems can be incredibly expensive to repair, sometimes requiring entire rooms being torn down to the studs. Certain types of mold can cause illnesses from skin irritation to obstructive lung disease. What is truly frightening about mold is how easily it grows. One study from the University of Arizona showed that 100% of the homes it tested showed positive for mold (1). 100%! If mold is so pervasive, how do we prevent it?

Mold Audit Your Property: Start by doing an audit of your property for hazards. Do you notice any of the following?

  • Flood prone areas
  • Carpeting in moisture prone areas
  • Water stains
  • Condensation build up on windows
  • Poorly ventilated kitchens or bathrooms
  • Clogged & broken gutters

Look into the best fix for your problem(s). While some solutions can be simple, some may require more complexity and cost.

Air Out: Moisture builds and accumulates in moist areas when there is insufficient airflow or ventilation. Make sure that you open windows in unoccupied properties regularly. Install high functioning fans and stove hoods to stem mold growth in the kitchen, laundry room and bathrooms. You may even consider adding dehumidifiers into your properties.

Keep Water Away: It’s important to remember that buildings are susceptible to mold growth from the outside in. Think about where water accumulates around the perimeter and then direct it away. Use flexible extensions on the end of downspouts and alter ground cover choices. Remember to keep gutters clean to avoid pooling water at the roofline.

Your Plumbing: While it is true that some leaks can be spotted and easily fixed throughout your home, many cannot. This is because much of plumbing systems remain unseen behind walls and underfoot. Major mold growth occurs frequently in properties with leaks that have been unaddressed for long periods, as the first warning sign is often a water stain or worse. Consider installing a leak detection system like AquaTrip.

AquaTrip is a permanently installed system that constantly monitors the entirety of a building’s plumbing. AquaTrip saves money by curbing potential water damage, reducing excessive water bills and controlling the potential for mold overgrowth. You can learn more about AquaTrip by visiting buyaquatrip.com or call 1-844-4-AQATRP to find out how you can join the Pilot Program for savings up to 50% off!

5 Ways To Increase The Value Of Your Rental Property

When you hold property as a rental investment, it’s only natural to want the value of your investment to increase. While the real estate market plays a role in the value of your properties, you can take matters into your own hands with home improvements that add value.

Five great ways to boost the valuation of your rental property and how to make these improvements.

Replace old bathroom fixtures. Bathroom upgrades deliver immediate impact and value. Replace outdated sinks and toilets with low-flow models that feature new hardware. You’ll save on water bills and instantly improve your apartment’s valuation. When replacing bathroom fixtures, hire a professional plumber to do the work.

Renew kitchen countertops. Even a minor kitchen upgrade will retain roughly 80 percent of its value five to 10 years down the road, which is great news for property owners who want to make money now and sell for a profit in a few years. Replacing cheap laminate countertops with wood, granite, cement or engineered stone is a great place to start when renovating an old kitchen. Hire a countertop installer for this task.

Dump old carpet and linoleum for high-end flooring. If your rentals have linoleum and wall-to-wall carpeting, this screams cheap and ugly to renters looking for a new home. Increase your apartment’s appeal and valuation by upgrading your flooring. Natural materials like wood or stone are favorites. These materials are durable, easy to clean and hold their value once installed.

Update lighting and appliances. Adding new fixtures and appliances can brighten the apartment, increase energy efficiency and give an old unit new life. If you have pre-1990 lighting, replace it to slash energy expenses and make the apartment look more modern. Always have lighting installed by a licensed electrician.

If you have old appliances — anything from a dishwasher to a hot water heater — swapping them for sleek, stainless steel, energy-efficient models will boost your return on investment and slash your overhead. Order new appliances during seasonal sales to get the lowest price. Many stores take away your old appliance for free when they install the new ones for you, reducing your overhead.

Increase storage. Storage is a top priority for renters. Whether you add a basement storage cubby, place a shed in the backyard, add open shelving in the bathroom, or put hooks by the front door, you’ll help renters make the most of the space. You can keep things cheap and easy by using hooks and shelves you can hang yourself, or hire someone for more sophisticated storage upgrades.

Tips for Property Owners Who Want to Improve Rental Investment Value

Plan smartly by making home improvements in between tenants. Time your repairs so the unit’s ready when demand peaks in your area. This way, you can rent out the renovated unit quickly and command a competitive price. In turn, immediately starting to recoup the money spent on repairs through the higher rental property valuation and new market-rate rent.

Questions You Cannot Ask a Prospective Tenant

When interviewing prospective tenants, you want to make sure you get the best tenant for your property, so naturally, you want to ask them as many questions as possible. You have to be careful however. There are many questions which you are legally not allowed to ask tenants. Learn what not to say when interviewing a prospective tenant.

1. Questions That Violate Fair Housing Laws
Never ask anything that could be interpreted as discrimination under the Federal Fair Housing Law or under your State’s Fair Housing Law.

The Federal Fair Housing Act protects seven classes: race, color, religion, sex, national origin, disability and familial status. In addition, many States have additional protected classes such as marital status and sexual orientation.

Examples of questions/statements that could violate the Federal Fair Housing Act:

Race:

  • What race are you?
  • Are you Chinese or Japanese?
  • You look Italian. You should consider renting in the next town over, there are a lot of pizza places around there.
  • You would love the area, a lot of minorities live here.

Color:

  • You have very dark skin, are you white or Hispanic?
  • You’re very pale, I don’t know if you’d fit in here.
  • You have dark skin, I don’t know if you’d feel comfortable in the neighborhood.

Religion:

  • I’m not Christian, so I don’t want you to put up any Christmas decorations in my building.
  • There aren’t a lot of temples around here, I don’t know if you’d fit in.
  • Are you Buddhist? Don’t go turning one of the rooms into one of those meditation places.

Sex (Includes Gender and Sexual Harassment):

  • Having someone who looks like you as a tenant would definitely make me check on the building more often.
  • I don’t feel safe renting to a woman on the first floor.

National Origin:

  • In what country were you born?
  • Where were your parents born?
  • What is your first language?
  • Are you disabled?
  • I don’t allow animals, so I will not allow your service dog.
  • Are you an alcoholic?

Familial Status:

  • I don’t rent to people with kids.
  • Are you pregnant? I don’t want a screaming baby disturbing the other tenants.

To be safe, you should also avoid questions about marital status, sexual orientation, source of income, age or any other possible protected class in your State.

  • Are you married?
  • Are you divorced?
  • Are you gay?
  • (To a man:) I think having your boyfriend visit will make the other tenants uncomfortable.
  • You’re going to have to pay a higher security deposit because your income is from unemployment and I’m afraid I might have to evict you in the future.

2. Have You Ever Been Arrested?

You cannot ask a prospective tenant if they have ever been arrested. There is a big difference between being arrested and being convicted of a crime. You can ask the prospective tenant if they have ever been convicted of a crime. This is something that can be readily discovered by running a background check. Keep in mind that in many states, such as California, you cannot discriminate against a person because they have been convicted of a crime.

The crime would have to influence their ability to be a good tenant, such as an illegal drug conviction or a history of violent offenses which could put other tenants at risk.

3. Any Question That Is Not Part of Your Normal Qualifying Standards

You must have the same qualifying standards for all prospective tenants. It you do not follow the exact same procedures for all tenants, you could be accused of discrimination. For example, while it is legal to perform credit checks on tenants as long as they consent to it, if you only perform credit checks on African American tenants, this would be considered discriminatory.

Another example would be if you asked people who were not necessarily well dressed questions about their eviction history or criminal convictions, but ignored such questions for people who were well dressed. This would also be discriminatory. You should set a list of questions that you will ask all prospective tenants to “qualify” them as potential tenants.

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