Five Things to Do With a Windfall Other Than Spend it Right Away

Five Things to Do with a Windfall Other Than Spend it Right Away

Perhaps you have won the lottery, received an inheritance, or cashed in one of your investments, and now you have a large sum of money you don’t know what to do with.

Although it is tempting to cruise around town in a brand new sports car it is important to think carefully about how to spend your newfound cash.

To give you some ideas on the smartest way to use your new wealth, here are five things to do with a windfall other than spend it right away:

1. Erase Your Debt

Your new found money will allow you to clear up all of your debts, which will lift a huge financial burden off your back and give you a lot of freedom. Start with the debts with the highest interest first, such as your credit card debts.

2. Create an Emergency Fund

Calculate how much money you would need to cover your living expenses for 6 months. Take this amount off your windfall and place it into a savings account. This money will be your fail safe. In case of an emergency, such as you hurt yourself, become ill, or lose your job, you will have enough money to live comfortably until times get better, without having to go into debt.

3. Invest in Your Home

If you spend your windfall on a renovation for your home, there is a good chance that you can increase your property value enough to make it more than worth it. Talk to estate agents in your area to determine which type of home improvement will increase your home’s value the most, but usually kitchens and bathrooms are the best rooms to update.

4. Buy a Vacation Property

Consider putting your newfound wealth into a holiday home overseas in a popular destination. You will be able to enjoy lounging on the beach there, and when you are not using it you can rent out the home to tourists to cover the costs. Later on in life when you want to retire, you will always have the option of moving there!

5. Live Off the Interest

If you won a million dollars in the lottery, you could spend it right away on a huge house and a car and then have nothing left. Or, you place it in an investment account and have it earn 6% annually. At this rate you would have approximately $5,000 per month or $60,000 per year without ever touching your initial sum. You could easily live off this amount and never have to work again.

These are a few ideas of what you could do with your money if you are lucky enough to receive an unexpected windfall.

Do you have any other ideas of how you could use your windfall?

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Posted in Personal Finance | Tagged , ,

How To Buy A Bargain Home As A Short Sale

How To Buy A Bargain Home As A Short SaleA short sale is when the mortgage lender(s) agrees to sell the property for a lower amount than the loan-balance remaining.

During the worst moments of the 2006 to 2008 real estate crisis, homes sold as short sales for a fraction of their value. Lenders had so many properties with loans in default that they could not manage the ones that they had in foreclosure.

Foreclosure is an expensive legal process that causes a lender to lose more money on a property. This is one of the motivators that encourages lenders to accept a short sale because sometimes through a short sale the foreclosure process is avoided.

Are Short Sales Still Available?

The number of short sales peaked in 2012. The inventory of homes available for a short sale transaction is much lower than the massive numbers caused by the 2006 to 2008 real estate crisis; however, they still do exist.

Short sales are still worth exploring as long as a qualified buyer has enough cash on hand or is pre-qualified with home-purchase financing that is acceptable for a short sale transaction.

A short sale may be a bargain; however, the buyer must be careful because there are some pitfalls to avoid in short-sales transactions.

The Challenging Dynamics Of A Short Sale

There are three (or more) parties in a short-sale transaction. They are the seller, the buyer, and the lender(s). All must agree to the closing sales price of the home and the terms and conditions of the sale in order for the transaction to succeed. The lender(s) forgives part or all of the mortgage loan that is secured by a lien on the property and agrees to take a loss on the sale.

A short sale only occurs when the home cannot sell for the amount of the mortgage loan(s) on the property. The home is considered to be “underwater,” which is a colloquial term for a home, with a loan(s) that is more than the home is worth.

Short sales do not close quickly because the paperwork is complicated. If there is more than one lender on the property, the process is even slower. Buyers in short sale transactions need to be patient. They must be approved for financing and also approved by the existing lien-holder(s) on the property that is for sale by making a successful short-sale application.

A buyer may need to make a “good faith” security deposit to initiate the short sale application process. The deposit, which is refundable, may sit in a trust account for quite some time before the deal is approved.

Even with proper planning, a short sale deal can still fall apart. Buyers must also take on the risk that the property may need significant repairs and buy the property “as-is.” Homeowners who cannot pay their mortgages usually are not very diligent at taking care of their properties.

Summary

Short sales are an important strategy to consider when searching for a bargain property. Buyers must have cash or significant financial strength and be willing to complete the complex process for the transaction.

To reduce risk, a buyer needs to get careful inspections of the home and have a very clear idea of the costs to bring it up to a nicely-repaired condition, in order to profit from this strategy.

Be sure to get your financing pre-approved before starting any negotiations. Your trusted home mortgage professional is ready to assist with this process and discuss all available financing options. 

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What Is A Reverse Mortgage?

What Is A Reverse MortgageA reverse mortgage is a way to use the equity value that built up in a home to improve the quality of life for those who have appropriate circumstances when they reach the retirement age of 62 or older. With a reverse mortgage, a person continues to live in their own home and retains the title to it but does not have to make any monthly reverse mortgage payments.

A reverse mortgage may be helpful; however, not everyone qualifies for one. The benefits come with disadvantages as well. Here is a list of the advantages and the disadvantages for reverse mortgages.

Be sure to discuss this option with a qualified professional when thinking about a reverse mortgage before making any commitment.

Reverse Mortgage Advantages

  • Reverse mortgage funds may be used to pay off an existing home loan balance. The funds may be taken out in a lump sum or paid in monthly installments for a certain period.
  • The reverse mortgage creates a lien on the home but does not require any monthly loan principal or interest payments. This continues as long as the person lives in the home and takes care of it (paying the property taxes, home insurance, HOA fees, etc.)
  • Usually, a reverse mortgage has no effect on social security payments or Medicare benefits. It does not usually cause any tax consequences because it is a loan structure, not income.
  • If repayment of the loan happens at some point, any equity remaining is still available to the homeowner for any purpose, such as giving something to heirs.
  • It is a non-recourse obligation. There is no personal liability to repay the reverse mortgage loan if the equity value in the home is not sufficient to pay it off.

Reverse Mortgage Considerations

  • Since a reverse mortgage has no payments, the loan balance increases and the interest accumulates over time.
  • A reverse mortgage reduces the equity in the home that would otherwise be available to heirs. If the remaining equity exceeds the loan, the home can be sold off to repay the loan and the balance can then go to the heirs.
  • Medicaid eligibility or disability payments (SSI) may be affected.
  • A reverse mortgage loan becomes immediately due if certain things happen, such as the death of the homeowner, the homeowner vacates the house for six months or more for a non-medial reason and 12 months or more for a medical reason. It becomes due if the home is no longer the principal residence of the reverse mortgage borrower.
  • The loan is immediately due if the homeowner does not pay the property taxes, home insurance premiums, HOA fees, and other things necessary to maintain the home.

Summary

A reverse mortgage is a special financial tool that needs to be used only when appropriate. Typical rates for these loans may be higher than standard home equity lines of credit and other traditional home-refinancing options. Consider all the details very carefully before and as always, consult with your trusted home finance professional to get the best advice for your unique situation.

Posted in Mortgage | Tagged , ,

7 New Home Upgrades that Could Save Your Life

7 New Home Upgrades that Could Save Your LifeOne of the best things about moving into a new home is personalizing it and really making it yours. From hanging wall art to arranging furniture to finding the perfect spot for your grandmother’s hand crocheted afghan, it’s a real joy to decorate.

But are you forgetting about the big investment you just made? Consider the following important home upgrades that will protect your home and your family.

1. Smoke Alarm

Take an afternoon and upgrade all your new home’s smoke alarms. Smoke alarms save lives and it’s not worth it to assume that just because it’s there it’s working. 

2. Carbon Monoxide Alarm

Do the same upgrade with your carbon monoxide alarm. If your new home doesn’t yet have one, go ahead and pick up the latest model. Even if your home has all electric appliances, it’s worth it to have this added protection.

3. Trim Bushes

It’s lovely to have a home that’s nestled behind evergreens, but you should know that this gives intruders easy cover around the perimeter of your home. Trim bushes so they are no more than four feet high so intruders have nowhere to hide.

4. Outdoor Lighting

Outdoor lighting adds to the curb appeal of your home and also deters intruders. Install solar lighting to highlight attractive areas and motion sensor lighting around windows and doors. 

5. Security System

Consider enrolling in a security alarm system for your new home. Several companies offer this option. These systems come with cameras that you can have in/or around your home. The mere presence of cameras is often enough to ward off unwanted persons. 

6. Fire Extinguishers

Stock every room with a fire extinguisher. Many times people only put these in the kitchen, but a candle or electrical fire can break out anywhere, including the garage. This isn’t technically an upgrade, but this could save your live and your property.

7. Door Alarm

If you have children, consider installing a door alarm on your sliding patio doors. This is especially helpful if you have a backyard swimming pool. A door alarm can be picked up at the local hardware store and installed within minutes if you’re even a little bit handy.

These seven tips will help to ensure that both you and your home are well-protected. After this, you can get back to decorating comforted by the knowledge that you’ve taken care of the important points first.

Another way to protect your family is to be sure that you have the best financing options available by staying in contact with your trusted home mortgage professional.

 

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What’s Ahead For Mortgage Rates This Week – June 10th, 2019

What’s Ahead For Mortgage Rates This Week – June 10th, 2019Last week’s economic releases included readings on construction spending, public and private sector jobs and national unemployment. Weekly reports on mortgage rates and first-time unemployment claims were also released.

Construction Spending Little Changed in April

Census Bureau readings for April showed a minor dip in construction spending as compared to revised figures for March. $1,295.5 billion was spent on a seasonally-adjusted annual basis and missed the expected reading of $1,314.7 billion.

March construction spending was revised to $1,299.2 billion. Falling mortgage rates were good news for home buyers, but concerns over global economic disputes and higher materials prices concerned home builders.

Mortgage Rates Fall as Initial Jobless Claims Hold Steady

Freddie Mac reported lower average mortgage rates across the board. 30-year fixed mortgage rates dropped 17 basis points to 3.82 percent; the average rate for 15-year fixed rate mortgages fell 18 basis points to 3.28 percent and the average rate for 5/1 adjustable rate mortgages fell eight basis points to 3.22 percent. Discount points averaged 0.50 percent for fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

Initial jobless claims were unchanged with 218,000 first-time claims filed.  Monthly labor reports issued for May showed sharply lower jobs growth for public and private sector jobs.

Public and Private Sector Jobs Growth Dips in May

In a potential warning of slowing economic growth, public and private sector job creation fell far short of expected readings in May. The Labor Department’s Non-Farm Payrolls report showed 75,000 new jobs in May as compared to expectations of 180,000 new jobs and April’s reading of 224,000 public and private sector jobs created.

ADP’s report for private sector jobs growth was equally dismal for May; 27,000 jobs were created as compared to April’s revised reading of 271,000 private sector jobs created. Mark Zandi, who developed ADP jobs reporting, said “The economy is weakening; growth is slowing and slowing sharply.” The national unemployment rate was unchanged at 3.60 percent, which matched expectations. Analysts said that signs of slower economic growth could lead the Federal Reserve to implement monetary easing. 

Whats Ahead

This week’s scheduled economic news includes readings on inflation, retail sales and consumer sentiment. Weekly reports on mortgage rates and new jobless claims will also be released.

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Make the Most Of A Small Yard Space

Living With a Small Green Space: How to Make the Most of a Smaller, Intimate YardIt’s great to have a yard in this day and age, but so many new developments in the city have limited green space for you to let your imagination run wild. If you’re wondering what you can do with your patch of green space or small yard, here are a few options for making it aesthetically appealing and still maximize the potential.

Pick A Centerpiece

In order to stretch the look of your green space, try adding a centerpiece or focal point that will draw the eye and instantly improve your yard’s appeal. Whether you decide on a planter, a birdbath or an awning covered in vines, a unique piece will work to distract from the limitations imposed by your yard. A centerpiece may do nothing to expand your garden space, but by changing the way you view it, it will make all the difference in how you feel about it.

Make It Match

Your garden or back green space is going to look a whole lot smaller if it’s eclectic style diverges greatly from your home, so keep the two aligned. If there’s a selection of colors and style you use in the room that faces your yard, use them outdoors! It’s also important to make it something you’ll really use. As landscape architect Amber Freda of Amber Freda Home & Garden Design says, “A plain dining table with wooden chairs won’t entice you to use it very much, but really comfortable lounge seating will.”

Keep It Clean

It’s a well-known fact that clutter in any enclosed space will instantly make it look smaller, and it’s no different when it comes to your yard. Instead of jamming an excessive amount of stuff into your small space, keep it simple and decide exactly what you want to get out of the area, whether it’s a vegetable garden or a comfortable place to sit. In keeping with clutter free, you’ll also want to make sure you keep any invasive or aggressive plants from making themselves too comfortable!

It may seem limiting to have an undersized green space, but by deciding what you want to get out of it and creating a central point of interest, you’ll be well on your way to a comfortable place. 

If you are interested in purchasing a new property, be sure to contact your trusted home mortgage professional.

Posted in Around The Home | Tagged , ,

Renovations That Improve Resale Value And Those That Don’t

Renovations That Improve Resale Value And Those That Don'tThose who want to renovate a home usually do this to make it more spacious, improve its condition, and to add amenities. However, it is also important to consider if the renovation has the potential to add value to a home.

Unless the plan is to live in the same place for life, there is a strong likelihood that, at some point, the home will go on the market for sale. It is nice if it sells for a high price and there is some profit for the seller in the transaction.

It is not the amount spent on renovations that is the key consideration. In fact, spending a lot of money making certain renovations may not improve the sales price, when the home sells. This guide helps decide between renovations that add value and ones that do not add value.

Renovations That Add Value

Renovations that add value are those things that almost everybody wants, which include:

  • Upgraded Kitchen: Having a professional-style cooking area and all the appliances with matching stainless steel-finishes creates an attractive upgraded kitchen. Many appreciate having an island area in the center for use as a working area when cooking large meals that doubles as an eating area for breakfast.
  • Luxurious Master Bedroom and Bathroom: Homes with a large master bedroom with big windows and a king-sized bed usually sell for a top price. If the master bathroom has a large renovated bathroom with a big tub, then this is a plus.
  • Extra Bedroom: Having another bedroom puts a home in a higher-valued category.
  • Lots of Closet Space: Many think that adding an extra bedroom is sufficient; however, adding extra closet space is also a great idea, especially when adding walk-in closets with his/hers vanity areas that are accessible from the master bedroom.
  • Green Systems: Solar energy systems that reduce the monthly utility bill are desirable. Energy-efficient windows are also attractive.
  • Smart Home Systems: These systems offer computer control of the home for energy efficiency, security, and convenience for the occupants.

Renovations That Do Not Add Value

  • Carpeting: Carpet colors are a matter of personal taste. If the carpet is not brand-new or thoroughly cleaned, it will lower the interest in the home. It is better to have nicely-finished wood or tile flooring with rugs strategically placed to create different usage areas. Offer to sell the rugs for their value with the home or to take them away.
  • Excessive Front Yard Decorations: There are a few homes that have so many garden gnomes in the front yard that adding another one is nearly impossible. Avoid this because not everybody appreciates this style.
  • Swimming Pools: For many, this is potentially negative. The cost of building a new, in-ground, swimming pool is not usually an amount recouped in the selling price. Some like pools; however, many others do not like the idea of continual maintenance and monthly expenses. Families with young children may see pools as very dangerous.
  • Bright-Orange Exterior Paint: It is not surprising to learn that most people do not like houses painted this color and other garish colors. Even if the paint is new, they do not usually sell for a higher price.

Summary

In general, in order to add value with renovations, do the things that most people appreciate. Complete the project for a budget to add to the purchase price of the home that will not exceed the average market value of a home of a similar type.

Homeowners who follow this general rule, get to enjoy the renovations and get their money back, perhaps with some profit, when the home sells.

If you are in the market for a new home or considering renovating your current property, be sure to contact your trusted home mortgage professional to discuss current financing options.

Posted in Real Estate | Tagged , ,

The Importance Of “Rights” When Buying A Property

The Importance Of Rights When Buying A PropertyWhen buying real estate there are certain standard rights usually included, unless the property has an encumbrance that in some way causes an exclusion as noted in the sale.There are also additional rights that may or may not be in the sale, which may represent significant value.

Standard Real Estate Ownership Rights

The standard rights conveyed to the owner of the title deed for a property include:

  • Possession: Possession is a legal word for ownership. Possession occurs after closing on the purchase of a property, receiving the title, and recording the sale with the county office where the property is. Anyone who has a claim against the property files a lien with the county for the amount of the claim. These can be on behalf of the mortgage lender, a tax authority, a building contractor, and others who win a judgment award, in the courts, against the property owner.
  • Control: The buyer of the property gets control over it, subject to any prohibitions under law or rules of a homeowners’ association (HOA) called “covenants and restrictions.” Be sure to read all the details of the HOA rules (if any). Investigate any county and city restrictions as well to understand allowed uses of the property.
  • Exclusion: Owners of private property control who uses it, with the exception of any easements that may exist. Common easements allow utility companies and municipalities access to some portion of the property. These may be found in the zoning regulations or indicated in the title documentation. Less common easements, allow others to cross the property or have an access road to get to other properties.
  • Enjoyment: This permits the owner to use the property in any legal manner. For example, if not prohibited by any HOA rules, county laws, or other restrictions, a new property owner can do whatever they like on their property, such as put up a pig farm or fill the yard with broken-down automobiles. However, there are usually rules and laws that prohibit this type of “enjoyment.”
  • Disposition: This right allows an owner to rent, sell, or transfer the property when desired. However, any liens have the ability to have priority to block a sale or transfer until they are fully satisfied.

Special Real Estate Ownership Rights

There are additional rights that may be included in the sale or not, which include:

  • Mineral Rights: These rights include anything found underground such as valuable metals, gemstones, minerals, natural gas, and oil. If these rights do not sell with a property, it is possible that a third-party will own them and have the right to come onto the property to extract them.
  • Water Rights: If there is any natural water available to the property, such as lakes, rivers, streams, water wells, and underground aquifers, these water rights can be sold, or not, with the property.
  • Air/View Rights: These rights may include all the air above the property and the views from the property. These rights become important in congested areas where construction on an adjacent property might block a view, put the property in a shadow, or inhibit desirable breezes.

Title Insurance

Most real estate transactions close with the help of a title company. The title company does the research to determine the included rights and any encumbrance by liens. Title insurance is protection for the home buyers that there are no claims, which remain unidentified in the closing documents by the title company.

Ownership of property comes from holding the title to it. The documentation of the title is the deed. When a sale occurs, creating a new deed transfers the title of the property along with any rights associated with it.

Summary

Knowing the rights when buying a property is a part of being a well-informed buyer. All rights that are available for a specific property are valuable. The rights included the sale (or lack thereof) create the full value of the real estate.

Be sure to partner with a trusted real estate agent and home mortgage professional to assist you with all of your real estate needs.

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Want to Make A Richer Life? Take Time To Make Time

Want to Make A Richer Life? Take Time To Make TimeMany who are financially sound got that way by being skilled at accumulating wealth. The question is, did they also accumulate quality of life? Working all the time to build wealth, while at the same time lacking happy experiences with those who are important, is not creating a rich life.

Here are some ideas to promote both a healthy and wealthy lifestyle.

Time Budget

For those who already do a decent job at managing their finances by using a budget, congratulations for doing half of the planning well. In order to have a fully-satisfying life, the other budget that is needed is a time management budget.

Allocate time on a weekly basis to all the other things that are important, which, in addition to money-making efforts, may include:

  • Personal Growth and Development: Examples in this category include daily meditation, yoga practice, and self-help classes.
  • Quality Family Time and Time with Pets: This category is less about the things to do and more about who does them together. Take time to sit with kids and play with them. Walk the dog or use a laser light on the wall to play with the cat.
  • Community Service: Make an effort to spend at least one hour each week doing some community service. This is a “pay-it-forward” way to keep everything in perspective and develop an attitude of gratitude.
  • Stress Relief: Find a way to release anger and frustration in a healthier way, such as going to a gym and working out with a punching bag.

Make More Time

Time is actually more precious than money. The best practice strategy is looking for the possibilities to create more passive income that requires money investment to produce a positive result but little or no time to make it happen. Creating passive-income streams by investing in real estate is a way to achieve wealth, while also creating free time.

Delegate And Outsource

Make a list of the little annoying things that take the most time. Find a way to delegate some of those tasks to others. Consider using the help of freelancers to outsource things that are time-consuming and can be done more efficiently by others.

Let A REALTOR® Do The Work

If there is some investment capital available to work with, find a real estate agent that becomes an integral part of the long-term business strategy. Make an investment plan together and let your agent find the properties that qualify for the strategy. Be happy paying the agent commission for a property acquisition that meets the investment criteria.

Success Creates More Success

Rewarding others who bring valuable deals that create passive income usually improves the results. If possible, start young, be patient, and, step-by-step, build up a valuable real estate portfolio. The life goal is to eventually create enough passive income, which requires so little time that most of the time can be spent playing with pets along with the grandkids. That is the meaning of true wealth.

If you are in the market for a new home or interested in refinancing your current property, be sure to contact your trusted home mortgage professional to discuss current financing options.

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What’s Ahead For Mortgage Rates This Week – June 3rd, 2019

What’s Ahead For Mortgage Rates This Week – June 3rd, 2019Last week’s economic news included readings from Case-Shiller on home prices and pending home sales. Readings on consumer confidence and weekly reports on mortgage rates and new jobless claims were also released.

Case-Shiller: Home Price Growth Slows in March

While home prices continue to rise throughout the U.S., they are growing at a slower pace. Case-Shiller reported that Home prices dropped 0.20 percent in March to a growth rate of 3.70 percent on a seasonally-adjusted annual basis. Case-Shiller said that March home price growth was the lowest rate reported in 10 years.

Top cities for home price growth in March were Last Vegas, Nevada with a seasonally-adjusted year-over-year home price growth rate of 8.20 percent; Home prices rose 6.10 percent in Phoenix, Arizona and increased by 5.30 percent in Tampa, Florida. These three metro areas suffered steep declines in home prices during the recession.

Home prices are no longer growing at double-digit rates, and the West Coast is no longer experiencing rapid growth of home prices previously reported in Seattle, Washington, San Francisco and Los Angles California metro areas. Analysts said that while home-buyers continue to seek homes in temperate climates, they are no longer looking in high-cost coastal metro areas. New York City was the only metro area reporting a month-to- month negative growth rate in home prices, but it is already one of the highest cost housing markets in the nation.

Pending Home Sales Fall for 16th Consecutive Month

According to the National Association of Realtors®, the annual rate of pending home sales fell for the 16th consecutive month in April. The Midwest region was the only region to report growth in pending home sales with a reading of +1.30 percent growth. Northeastern regional pending sales fell by -1.80 percent. Pending home sales dropped -2.50 percent in the South and fell by -1.80 percent in the West. Real estate pros and mortgage lenders track pending home sales as an indicator of future home sales closed and mortgage loan volume.

Mortgage Rates Fall as New Jobless Claims Rise

 Mortgage rates fell across the board last week in response to uncertainty in global markets. Rates for 30-year fixed rate mortgages fell seven basis points to 3.99 percent; rates for 15-year fixed rate mortgages averaged 3.46 percent and fell five basis points. Rates for 5/1 adjustable rate mortgages fell an average of eight basis points to 3.60 percent. Discount points averaged 0.50 percent for fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

Weekly jobless claims rose to 215,000 initial claims and matched expectations. Analysts did not find last week’s increase of 3000 new claims filed an indicator of weakening economic conditions.  Unemployment remains near an all-time low set in 1968.

Consumer confidence as reported by the University of Michigan’s consumer sentiment index was revised to reflect a dip in consumer confidence after tariffs on Chinese imports were imposed. Consumer confidence dropped to an index reading of 100.0 as compared to May’s initial reading of 102.4.

Whats Ahead

This week’s scheduled economic reports include readings on construction spending and labor sector reports on private and public sector job growth and the national unemployment. Weekly reports on mortgage rates and new unemployment claims will also be released.

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