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Displaying blog entries 1-10 of 72

Would-be Buyers with Student Debt

by Gina McKinley

This is very interesting...these loan programs would help a lot of first time buyers buy their first home in the Phoenix area. Buying a home now can be a great option as paying a mortgage will help you build wealth and equity versus paying rent for money that you would never see again. Read on to learn more...

59% of non-owners are not comfortable taking on a mortgage with their student debt according to the Aspiring Home Buyers 2017 survey. It is estimated that the college graduates have an average of $37,172 in student debt.16522219-250.jpg

Fannie Mae, who has loan programs with as little as three to five percent down payments, has announced changes to how student loan debt is treated that could make the difference in qualifying for a mortgage.

For the 5 million borrowers who participate in the reduced payment plans, actual payments are considered for calculating debt-to-income ratio rather than maximum payment amount.

Non-mortgage debts paid by another party for at least 12 months won’t be included in calculating debt-to-income ratio.  For example, payments being made on a student loan by the parents would not be counted against the DTI ratio for the student.

These changes can make it possible for would-be buyers with student debt to get a home now instead of waiting for years. Being pre-approved by a trusted mortgage professional is the best way to confirm that these changes apply to your situation.

Call me today at 480-355-8645 for a recommendation of a trusted mortgage professional, or send me an email at Info@LocateArizonaHomes.com.

Good Info - Good Decisions

by Gina McKinley

Having the best information when making a home buying decision is key, but it goes much further than making sure it's a quality house in your preferred neighborhood.  Understanding how the economy can affect that decision is important too; even in an appreciating market, the biggest hit to affordability is rising interest rates.  That's why it's important to get the best loan options and interest rate possible - at the end, I'll have a resource so you can find out if you can take advantage of these low rates while they're still here.

While low inventory is certainly challenging buyers, not having a clear understanding of mortgage financing is also causing issues. By having good information, they are able to make better decisions as well as compete favorably.Mortgage Rate History0517.png

Most buyers don’t realize how the mortgage rate is determined for a borrower. While annual income is important, a good credit score, low debt-to-income ratio, loan-to-value ratio and ability to repay the loan are vital concerns.

A variety of myths seem to permeate the market such as rates are set and released once a day; FHA loans are for first-time buyers only; pre-qualification commits the lender; lender fees are not negotiable and adjustable rate mortgages always go up.

Misunderstanding of actual mortgage practices may be a contributing factor to why more buyers are not taking advantage of what are still historically low mortgage rates.

While getting solid information about mortgages and being pre-approved from a lender are very important, it is only one step in the home buying process. Success in buying a home in today’s market should begin with a real estate professional who will coordinate all the different parts of the transaction including mortgage, title, insurance, and inspections.

This is so true, especially in today's market with low inventory levels! Having someone who is a full time professional who has the connections to make the home buying process as stress-free as possible will make a world of difference in your home buying experience.  Give me a call at 480-355-8645 or email me at Info@LocateArizonaHomes.com today and I'll be able to put you in touch with the right people to make one of your biggest purchases one of the easiest you've ever done!

Reasons to Refinance

by Gina McKinley

Even with the mortgage rates being so low the past several years, it's still a good idea to ask the question on whether or not to refinance your home.  In addition to the reasons listed below, you could also refinance out of an FHA loan into a conventional loan so your mortgage insurance can be removed with the refinance or automatically removed down the road.  Take a look and at the end I'll have a resource to see if refinancing is right for you and your family.

Regardless of the reason to refinance a home, the basic question to ask is: “Do you plan to live in the home long enough to recapture the cost of refinancing?” There are always expenses involved in refinancing which can be paid in cash or rolled into the new mortgage.

From a strictly financial standpoint, the break-even point is achieved when the cost of refinancing has been recaptured by the monthly savings. It would take approximately 23 months to recapture $4,000 of refinance costs with a lower payment of $175 a month. Below are some common reasons why people refinance:

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  1. Lower the rate
  2. Shorten the term so that the loan will build equity faster and be paid off sooner.
  3. Lower your payment to reduce your monthly cost of housing.
  4. Convert an Adjustable Rate Mortgage to a Fixed Rate Mortgage to stabilize your payment due to concern of rising interest rates.
  5. Cash out equity to be able to use the money for another purpose.
  6. Combine a first and second mortgage.
  7. Consolidate personal debt so the interest is tax deductible.
  8. Payoff higher cost debt such as credit cards, student debt, etc.
  9. Remove a person from a loan as in the case of a divorce.

Points paid to purchase a principal residence are tax deductible completely in the year paid. However, the points must be spread over the life of the mortgage on a refinance. For that reason, consider getting a “par” value loan with no points. It may have a slightly higher rate but the interest will be fully deductible and it will lower the cost of refinancing.

Determine the break-even point on your situation by using the Refinance Analysis.

Do you fit into one or more of the above categories?  We've refinanced our home to take advantage of some of the above benefits - just because you've taken a 30-year fixed rate mortgage doesn't mean that you have to carry it for the entire life of the loan.  Call me today for a recommendation of a trusted mortgage professional!


An Alternative to Paying Tax Today

by Gina McKinley

This is a great strategy to take advantage of…my experience with one of our first rentals was to 1031 exchange the property into two additional rental homes in Chandler.  My husband and I were able to turn a monthly cash flow of about $100 into a $600 monthly cash flow. Read on until the end and I’ll have a resource for you to find out how you can do it too!

The cartoon character Wimpy would say that he’d gladly repay you Tuesday for a hamburger today. Some real estate investors say a similar thing to Uncle Sam to be able to hold on to their proceeds from the sale of an investment and agree to pay the tax later.

 

The benefit of a 1031 exchange is that it allows the investor to defer the tax due from the sale into the replacement property. This allows more money to be reinvested. In the example shown, the investor has 27% more to invest now by deferring the tax into the future.

The property to be exchanged must be like-kind which means real estate for real estate.   Rental property can be exchanged for other rental or investment property.  Personal-use properties like a first or second home are not eligible for exchanges.

There are some critical dates that restrict the validity of the exchange. The investor must identify the replacement property within 45 days of the sale of the relinquished property. The replacement property must be closed within 180 days of the sale of the relinquished property.

  • The replacement property must be equal to or greater in value, equity and debt than the one being relinquished.
  • All net proceeds must be used in acquiring the replacement property.

There are specific rules involved in constructing a valid tax-deferred exchange. There are three professionals that should be involved: a tax advisor, a real estate professional and a qualified intermediary who will assist in the acquisition and transfer of both the relinquished property and the replacement property. Additional information can be found in IRS Publication 544.

This is a very strategic process that should be started prior to listing your rental home for sale. I’d be happy to share the 1031 exchange company we used and to help guide you through the process of exchanging your existing Chandler rental home to purchase more income properties in Chandler or anywhere in the East Valley. Give me a call at 480-355-8645 or email me at Gina@LocateArizonaHomes.com!

Home Obligations and Divorce

by Gina McKinley

As a Special Real Estate Commissioner, I encounter many difficult divorce situations when it comes to dealing with the house.  A Special Real Estate Commissioner specializes in working with selling houses through a court order due to a divorce or other family matter. 

While no one goes into a marriage thinking of divorce, divorces do happen and can have a significant effect on your long term financial health.  Here is a short list of things to consider when negotiating a divorce if your plan is to stay in the house.

  1. Quit Claim deeds- Typically an attorney is going to recommend a quit claim to remove a spouse from title.  Quit Claim deeds are not the right deed to use as it creates what we call a “cloud on title”.  
  2. “Cloud on Title” issue – Your home came with a title insurance policy.  Re-titling your home causes a gap in that title insurance coverage. If there is an error such as an incorrect deed recordation, getting it corrected may become an issue as your policy could have been voided.
  3. Loan Obligation – A Quit Claim deed does not relieve an ex-spouse from their obligation for the mortgage.  The only way to remove a spouse from a mortgage obligation is to refinance or settle on selling the home.
  4. Due On Sale clause – Transferring title from a joint couple to one spouse can cause the lender to trigger the “due on sale” clause.  Therefore, plans to have one party stay in the home may not work if that party cannot pay-off the mortgage or qualify for a new loan.

It is best work with an experienced attorney and real estate professional before making a final decision on how to handle a home transfer and ensure that is it completed in the best interest of both parties.

Six Reasons to Consider Rental Homes

by Gina McKinley

Always a good investment Arizona's rental market has paid for many a child's college education. When buying a Arizona area rental for the child early in their life the equity position by their 18th birthday can be substantial, allowing Mom or Dad to utilize that or the monthly income to subsidize the tuition payments. But here are some other reasons to consider buying a rental property in Arizona...

Single-family homes offer an investor the ability to borrow large loan-to-value amounts at fixed interest rates for long terms on appreciating assets, tax advantages and reasonable control. Some of these characteristics are not available through other investments.

 

75-80% loan-to-value mortgages are available on most residential properties up to four units. Comparatively, the stock market allows you to borrow up to 50% on a stock but if the price goes down, they will require additional cash to keep the ratio at or below 50%. If it isn’t available, your stock can be sold to satisfy the loan.

Real estate investors call getting a long-term mortgage putting an investment to bed. The fixed-rate and the 20-30 year terms are exceptions to loans for most other investments, if they’re available at all. 

Real estate tends to go up in value over time. There can be a lot of variables that affect the price like supply and demand, condition and available mortgage money, in addition to the general economy.

Rental real estate has several different tax advantages. The profits are taxed at lower, long-term capital gains rates for investors who have owned the property for more than 12 months. While the property is being rented, investors are given a non-cash deduction based on cost recovery of the improvements. Tax deferred exchanges can also be available if specific conditions are met which allow an investor to postpone paying the tax on the gain.

It isn’t necessary to have a partner with most rental homes if the investor can qualify for the mortgage. This allows investor control to make all the decisions that an owner is entitled such as setting the rent, making improvements and determining when to sell.***

Rental real estate can earn a much higher rate of return than other available investments while providing income during the holding period. It certainly is worth investigating the possibility with a real estate professional who understands and works with rental properties.

***Often an IRA can be set up to buy real estate and a number of "Uncle IRAs" can join together, create a partnership or other agreement and buy much larger properties. You need the advice of 2 people here: a good Realtor and a good Accredited IRA custodian. I know both here in the Arizona area. Call me.

Reasons to Hire a Realtor

by Gina McKinley

Hiring a reputable professional realtor can help you whether you are purchasing a new build, purchasing for the first time, or have experienced the process a few times. A realtor can assist you through the process as it can be overwhelming and frustrating.

  1. A realtor represents you. The seller’s agent is loyal to their client even on a new build purchase. Remember the sales agent at a new build site works for the Builder. The buyer’s agent will keep your interests in mind.
  2. A realtor guides you through the process. They can explain the contract since they deal with it daily. Handle inquiries and spot potential issues.
  3. A realtor knows what to look for.  For a buyer, they may point out things you did not notice. As a seller, the agent may provide tips on staging or valuable update suggestions to increase value.
  4. A realtor is objective. They can help you find your ideal home or give you advice on marketing your home to attract buyers within your selling timeframe.
  5. Hire a realtor who is an expert of your local area. They understand the local market and can give tips to help you sell quickly or provide you with insightful information for the area.
  6. Realtors rely on experience and knowledge of the market to give you tips on inspections, price reductions and other issues that may arise during the process. For example, on new build purchase, a realtor may recommend you to hire an independent inspector to ensure the home is built properly.
  7. A realtor works on your behalf.  An agent uses their expertise and skill to communicate your interests with the other parties.
  8. A realtor continues to serve you even after you have closed on your home. They help you resolve issues that arise even a year after closing or connect you with reputable vendors or tradespeople within their network.
  9. Going it alone may end up costing you. By selling it on your own, you may price the home high resulting in sitting on the market too long and not marketed properly to attract the right buyers. By purchasing a new build without a realtor, it can cause you to add too many upgrades where the home may not appraise.

If you are thinking of buying or selling your home, please contact us today. 

Exciting News for Chandler – Hot Off the Press

by Gina McKinley

 

 

 

 

 

 

 

 

 

 

Intel is a major employer in Chandler with two large facilities. Intel just announced that they are going to more than $7 billion to complete the most advanced semiconductor factory right here in Chandler.  It will take about three to four years to complete the factory which will be known as Fab 42.  Intel is expecting to create 3,000 high-tech jobs for this Fab for process engineers, equipment techs, and facility support engineers and technicians.  This Fab is expected to create more than 10,000 long-term jobs in Arizona as Intel works with many indirect vendors that support the factory’s operations.

This announcement came today as Intel’s CEO, Brian Krzanich met with President Donald Trump in the White House.  This is great news for Chandler as FAB 42 was completed in 2013 but never opened.

This is great news for our local economy as the jobs listed are expected to be high paying positions which should continue to help our real estate and job recovery. If you have questions regarding our real estate market, please give us a call at 480-355-8645 as I’d be happy help.

2017 State of the Market

by Gina McKinley

 

Looking back at 2016 and reviewing the market stats is a great way to determine what 2017 may bring to the real estate market.  Some national publications are predicting the Phoenix metro area to lead the nation in appreciation in 2017 at a rate of six percent.  While this makes for great headlines, the reality of appreciation is not true for all price ranges.  Therefore, reviewing what happened in 2016 can be a good predictor for this year, so here is my annual State of the Market Report.

2016 finished as the 7th best year for home sales with demand about 11% higher than in 2015. 2017 should be stronger with loosening of credit and partial repeal of the stricter Dodd-Frank lending guidelines. Distressed properties (foreclosures and short sales) continue to decline are not a significant factor in the market.  Appreciation rate increases translate to equity in your home and 2016 finished with a 5.6% increase in the median sales price and an annual appreciation of 5.4% in price per square foot. However, the average for the market and price is greatly affected within each submarket price range as show below;

Price range                                                         Appreciation Rate

Less than $134,000                                                          15.4%

$135K - $163K                                                                    13.0%

$164K - $185K                                                                    9.6%

$186K - $210K                                                                    9.2%

$211K - $235K                                                                    7.9%

$236K - $262K                                                                    7.2%

$263K - $299k                                                                     5.3%

$300K - $355K                                                                    4.3%

$356K - $465K                                                                    3.2%

Over $465K                                                                         1.57%

 

I believe 2017 will see the higher appreciation rates expected as more buyers enter the market creating demand. The other change in the market is less homes for sale. For the amount of homes available, the resale market is down 4% year over year.  The market is optimistic as mortgage rates are not expected to increase significantly over the year and have continued to remain below 4.5%.  All of the indicators mean that 2017 should be a great year to consider making a move.

For more local information or assistance in listing or purchasing your home, please contact us today at The Gina McKinley Group with RE/MAX Masters. 480-355-8645

THINGS YOU CAN DO NOW TO INSTANTLY UP YOUR HOME VALUE

by Gina McKinley

As we head into listing season, here are some things you can do to add a little value to your home.  You don't need to take out a second mortgage or get a second job to make some valuable changes. A few hours of sweat equity and some minor changes for about $100 each and you will have updated your home and added selling value and typically less days on market, too.  You can complete these minor items over a weekend which will result in a big return.

Frame out your bathroom mirror         

Know how to use a saw and have some understanding of how to calculate angles? You can make your builder grade bathroom look more custom by creating a quick and easy frame. According to DIY Network, "This easy project should cost about $25 in materials and take approximately four hours to complete," and that's using cedar boards. Give it a quick splash of paint or stain to finish it off.

Change out your chandelier

A quick trip to Home Depot or Lowes can seriously amp up your style. They both have many current styles to choose from and will have friends and potential buyers awed vs. leaving in that ugly builder grade fixture.

Ensure all lightbulbs are working

Those burnt out or missing bulbs in the bathroom or the two (or three) overhead lights in the living room or kitchen that haven't worked in a while can give the impression of a dark and dreary home. Fresh bulbs can lighten up your home making it show light and bright.

Buy a new ceiling fan

If your ceiling fan is as old and ugly as your dining room chandelier, it's probably time for that to go. In winter, ceiling fans are typically on sale as they are not in season.  Home Depot or Lowes are great sources for stylish, inexpensive ceiling fans that will dress up the room’s look.

Redress your granite

Curb appeal is just as attractive to potential buyers as an updated interior.  Redressing your granite will freshen the look, add an additional layer to your existing granite, and just may keep some of those weeds away.  Landscape companies such as All Rock Supply in Chandler will deliver it right to your yard.

Add a backsplash

You can give your kitchen a little love and make it look more updated easily by adding a backsplash. Subway tile is an easy choice because it's classic and neutral and has been the favorite backsplash option for several years. Overstock.com has a case of porcelain tiles for only $85.99. Floor and Décor in Tempe also has many backsplashes in stock to choice from.

Jazz up your front door

A freshly painted front door is repeatedly counted among the best updates to make to your home. You can easily complete this task yourself. Just make sure the color you choose is an approved color with your HOA.  

For more local information or assistance in listing or purchasing your home, please contact us today at The Gina McKinley Group with RE/MAX Masters. 480-355-8645

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