Taking a Tax Holiday for Back to School

When I was young, summers seemed longer and more care free.  We got out of school at the beginning of June and went back to school right after Labor Day.  These days the summers don’t seem as long and they are always so jammed packed with activities and things to do, that, in the blink of an eye, it is over.  These days as I prepare for my son to return to school, (the first week of August, mind you) I of course need to make the dreaded trip to the store to shop for all the supplies and clothing he will need to start the school year.  What I find interesting this year is that, in 16 states, back to school shopping is now considered a holiday, from sales tax that is.  Living in a state that is not celebrating this wondrous holiday, I am having a hard time getting into the spirit of it.  Why do these few states get the luxury while the rest of us have to suffer the whole shopping experience with our children, as well as have to pay the sales tax on top of it.  Don’t get me wrong, I love my son, but there are only so many hours in a day and only so many tantrums, eye rolls, “whatever’s”, and “I don’t care’s” a person can take.  I think the Back to School Tax Holiday should be a national holiday that we, as parents, should have the privilege, nay right, to celebrate every year.  Now, who in Congress do I have to contact to get this rolling.  

The PMI Truth

         So, you have found the perfect home and have calculated what your monthly payment will cost based upon the sale price.  You talk to the lender, ready to sign the papers and the lender mentions those tiny little letters that many don’t even think about, PMI, or principle mortgage insurance.  Your lender may require mortgage insurance, because if you default on your loan, the lender will still get paid by the insurance on your loan. When looking for your perfect home and determining what you can afford for a payment, you need to consider this.  When your down payment is less than 20%, on conventional loans, and on all FHA loans, you will need to pay an insurance premium on the loan when the loan is taken out and the PMI monthly payments.  When you take a loan out the lender will charge 1.75% of the loan at closing.  This amount does not come out of your pocket, instead, it is added to the balance of the loan.  Then, when you make your monthly payments, you will be charged 1.35% of the loan.  This means if you have a loan of $200,000, your monthly PMI will be $270.00.  Unlike in the past, when the PMI could be removed once you have 20% equity or after seven years, now, the PMI monthly payments remain in place for the life of the loan.  However, once you have 20% equity in your house you can refinance to remove the PMI.  This is just something to keep in mind when purchasing a home.  Happy house hunting!

Quality not Quantity

When I was in college, many years ago, I would often procrastinate on my written assignments because I was often overwhelmed.  Always the perfectionist, I would hem and haw over every line until it was just right.   It wasn’t until my junior year, when I had a professor who made me look at things in a different way.  On the first day, she told us that in her class, an assignment is never done, it is just due.  In other words, do the best you can in the amount of time you have, and you can always improve upon it later.  She also said to not say things in 10 sentences when you can get your point across in a few really well written sentences with key words and phrases.  Her advice really hit home and I have kind of adopted it in many other aspects of my life from cooking dinner every night, party planning, job assignments, laundry, and even home improvement projects. 

            Whether you are you are roasting a chicken or redecorating a living room, the same rules apply to both and you don’t need to stress.  Set a due date (or time) and do the most you can in that allotted time.  Pick a few key accent pieces that make a statement to freshen up a room rather than holding up the whole project because you can’t find the exact piece of artwork to go over the mantle.  If you don’t have time to paint a whole room, just do an accent wall.  You are looking for quality not quantity.  There is nothing stopping you from going back and changing and improving upon it at a later date.  All you need to remember is nothing in life is ever done, it’s just due.  

Happy Independence Day

         

           When I think of the 4^th of July, I think of the backyard barbeque with all of the neighbors and family over.  Everyone bringing a great dish to share and the kids are all playing in the yard or swimming in the pool.  We are grilling hamburgers and hotdogs, maybe some chicken or ribs.  Of course, you can’t forget about watching the many fireworks displays throughout the area.  One problem, we don’t have a grill.  When we moved from our last house, our old faithful grill just didn’t survive the trip and now all we have is a tiny hibachi we use when we go camping.  So, this 4^th there will be no grilling, no neighbors and family coming over, and no kids playing or swimming; at least not at our house.  It really makes us think, should we just buy a grill or should we bite the bullet and install an outdoor kitchen? 

            When trying to decide which way to go, there are many things to consider.  What kind of space do you have in your yard and what will fit in that space?  You also need weigh the costs.  There are a variety of grills out there that will fit into anyone’s budget, but putting in a full outdoor kitchen can be very pricey.  Besides the cost of equipment, cabinets, and countertops, you will probably have to run gas, electricity and water out to it.  What if you get a new job and have to move? You can’t take the outdoor kitchen with you as easily as a grill. However, a full outdoor kitchen can add a lot value to your home, while a grill, not so much.  Well, we certainly have a lot to think about for next year.  This year, we will go to our friends’ house and catch the fireworks from there.  Now the other problem we need to deal with, no pool.  What to do, what to do?

The Hidden Costs of Going Green

In this day and age, everyone wants to do right by the environment and reduce their carbon footprint by going green, but, let’s be really honest, sometimes the cost of going green is more than the average homeowner can afford.  While some things are easy to do, like recycling, gardening, and using more environmentally conscious products around the home, others can have hidden costs associated with them.  For instance, installing solar panels on your home is a great way to lower your electrical bills on a month to month basis, and you could get some tax credit to reduce your federal tax liability in the year that the system was purchased.  But, what are the actual costs to the homeowner?

Purchasing solar panels outright is a huge expense and you need to weigh how long it will take for the monthly savings to cover the cost of the system.  In most cases, this will take years.  Also, you need to consider the fact that you will be responsible for any upkeep and maintenance of the system.  Some parts can cost as much as $2500, and need to be replaced more than once during the lifetime of the system.  Leasing solar panels is another way to go.  With a lease, you pay half to no money down and receive the same environmental benefits as purchasing.  If something goes wrong, the leasing company is responsible for the upkeep and maintenance.  However, you do not get the tax credit, the leasing company does.  Also, if you try to sell your home before the lease is up, you will need to ensure that the purchaser is eligible to take over the lease.  Additionally, make sure you read the fine print on your lease; some companies have hidden rates and fees that the homeowner may never even know about.  Going green is great but make sure you know what you are getting into upfront, or all those savings will be coming out of your pocket instead of going in.  

What Makes a Good Lender ?

Many people who are deciding to buy a house take the convenient way of being preapproval by using an online service.  Although this may be convenient, in most cases it is not the best source for that all important preapproval letter.  Purchasing a house can be a very stressful and emotional time for my clients.  There are many obstacles during the process, the last thing a buyer needs is an incompetent loan officer.  The number one cause of stress for my clients is not the inspections and escrow process, it is getting fully approved for the loan.  A lender is only as good as the loan officer who handed out the preapproval.  If the loan officer simply looks over the preapproval documents and glances at the credit history in order to rush out the preapproval it is a recipe for disastor.  A loan officer that carefully reviews all documentation, critically reviews the credit history, and asks the right questions makes the buyer feel like their in a dream during escrow period not a nightmare.

For example, I have a listing that fell out of escrow due to the buyer not being able to get fully approved for the loan.  This was after the loan officer told me that the buyer was fully approved and they were waiting for the loan docs to be drawn.  The next thing I know there is an email from the buyer's agent cancelling the contract.  One day the loan is approved and the following day the contract is cancelled.  (That's my nightmare.)  The proprety went back on the market and one of my new clients wanted to purchse the house.  These people are great clients, they are smart, know what they want, and even had two preapprovals.  Despite the online approval and the second one with an unknown lender, I requested that if they wanted to purchase the house they had to become preapproved with one of my preferred loan officers.  Sure enough during the meeting with the loan officer, which I attended, multiple issues were discovered from the questions asked by the loan officer.  These were issues not found during the preapproval process of teh other two loan officers.  But like a good Realtor, a good loan officer also knows how to correct minor problems, so the potential deal breakers were resolved in the first few days and now my clients are preparing to move without any worries.

                                            

So remember, a loan officer who does a thorough job during the preapproval process will lead you to a fully approved loan and your escrow will feel like a dream. 

 

FICO Scores and More

What is a FICO score and who cares anyway?  FICO is an acronym for the Fair Isaac Corporation, the creators of the FICO score.  Your FICO score tells lenders how good you have been paying your bills.  The more credit cards and loans you have the higher potential for your FICO score.  However if you miss a payment it could damage your FICO score.  When you go to buy a car or a house the first thing a lender does when performing a preapproval is run your credit. 

 

Depending on the type of loan you will need to have minimum FICO score.  For instance, if you are applying for a FHA loan you will need to have a minimum FICO score of 640. If you are trying to get conventional financing your score will have to be at least 660 and some lenders will require 680.  One of the most important things to remember is paying your bills on time will save you money.  When you are not late in paying your bills it has a positive affect on your FICO score.  You may qualify for a FHA loan with a 640 FICO score but your interest rate will be higher than if your score was 680.  This will cost you big money over the life of the loan.  So remember, not missing a credit card payment does not only raise your FICO score it also saves you money when you need it the most for a car or home loan.