15 VS. 30 YEAR MORTGAGES

mortageWhich is better: A 30-year fixed-rate mortgage or go for a lower-interest 15-year one?

Typically, 15-year mortgage allows you to pay off your mortgage quicker and save a significant chunk of money on interest. However, a 30-year may be a logical choice for most people because it has more advantages. Let’s take a look at the differences:

  • Payments are less with a 30-year mortgage which enables more consumers to qualify for home purchases.
  • Generally, you can make additional principal payments to pay off your loan faster without penalty.
  • A 15-year loan means you are committed to giving that extra money to your lender each month, whether you can really afford to at the time or not.
  • The higher payments of a 15-year mortgage make little sense if they keep you from building savings or contributing to a 401(k) plan, IRA or college fund.
  • The amortization schedule of 30-year fixed is back-heavy, with early-term payments big on interest and light on principal.
  • A 15-year fixed is always light on interest which lowers its taxpayer benefits.

While it’s true you gain more of a tax break from a 30-year loan, it shouldn’t be the main consideration when deciding on a term. The 30-year borrower pays less in yearly taxes because they pay significantly more in interest.

So it all comes down to choice and circumstances:

  • Choose the 15-year loan if you have the financial wherewithal to assume the payments. Your interest savings will be substantial and you’ll own your home faster.
  • The 30-year loan offers lower payments and greater flexibility. You can always choose to pay more on your mortgage when the money is available.
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COSTS FOR FIRST-TIME BUYERS

firstBuying a new home can be a huge, complex undertaking, especially when it’s your first time. That’s why it’s important to have an experienced real estate agent guiding you along the way.

The biggest mistake new buyers can make is underestimating the costs of buying a house and maintaining it over time. Many experts agree that homeowners should have 1%-3% of their homes’ purchase price in savings for improvements and surprise expenses. It’s wise to have at least six mortgage payments in the bank after a closing. These estimates may not work for everyone, but if you are spending above your means on a new home, you may quickly find yourself in financial trouble.

Inspections are important for the first-time buyer, as they list repairs that will be needed for the home. A buyer should put together a short-term and long-term plan based on the inspection so they know how much money they will need in the months and years ahead.

Renters are accustomed to paying basic utilities. Homeowners, on the other hand, must also pay for water, sewer and trash collection—as well as property taxes, homeowner’s insurance, homeowner’s association dues, yard care, snow removal and other expenses unique to your location.

Buying a home is one of the largest investments you’ll make. Your real estate agent will help each step of the way, first helping you establish a realistic price point for your home purchase and a clear understanding of your monthly expenses.

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5 SIGNS THAT THE HOME IS RIGHT FOR YOU

Excerpted from Trulia.com

A home needs to be the right fit – it is not about getting the most house you can – it is about getting the perfect ‘fit’.  Here are 5 signs that the house you are looking at is the right fit for you.

house box

1.  Room for Change
Finding a home that’s the right fit requires you to put on your visionary hat. Purchasing a home that’s too big or small can be a costly mistake that’s hard to undo. To make sure you properly assess your prospective home, develop a space forecast for your housing needs over the next 7-10 years (the time it normally takes to maximize the benefits of ownership).

Here’s a short list of a few factors to consider:
• marriage or moving in together
• having or adopting kids and animals
• sending kids off to college or to their own
separate households
• adult kids or family members that may need to
move in

2. Maintenance that Won’t Break 

The handling costs of owning a home can range from minimal to massive. They can also very drastically change based on a home’s region, condition, original construction date and other factors. Before you buy, talk to your local real estate expert about the average maintenance costs of homes in your neighborhoods of interest. Your agent can offer special local insight to prevent you from drowning in maintenance costs you didn’t anticipate.

3. Repairs You Really Want to Tackle
If purchasing an existing home, chances are you’re going to want to make a few adjustments. After you’re done touring a property and brainstorming improvements, do little extra research. Get firm estimates of the time, effort, and dollars involved in turning your potential home into your dream space. Also, ask your agent about home warranties that can minimize your exposure to future repair costs.

4. Lifestyle Friendly Fees

Whether you’re buying a single-family home or an apartment-style condo, ownership association fees have become much more common. And while most balk at the idea of the extra monthly costs, these fees can be a great investment if you shop correctly. The key: Invest in benefits that have value to you. Example: If you hate routine lawn maintenance, a monthly fee could be a small price to pay for a lot of peace of mind.

5. Commute Compatibility

Your commute seems like an obvious consideration when making a home purchase, but be sure you don’t stop at your ride to work. Factor in other places you frequent like schools, the grocery store, and other important lifestyle amenities. To find out what’s close to your prospective property and check its walkability score, visit Trulia.com and enter your property’s address for an up-to-date look at important points of interest nearby.

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