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Interest Only Loans

By Jeff Adolph

Residential Real Estate Loans

Many of us have heard of interest-only loans and have possibly even considered using them, but how many of us really know and understand what this type of mortgage is, and what situation they are best suited to?

Simply put, the interest-only mortgage is typically offered over a five-to-ten year term, and allows the mortgagee to pay only the interest monthly on their home loan, rather than the interest and the principal, as conventional mortgages do.

The advantages of an interest only mortgage are:

1) The mortgagee has extra cash monthly to pay off other home expenses and bills;

2) The mortgagee is able to invest the money that they would have paid on their home loan principal in to a high paying account, which will give them a better return for their investment over the long-term;

3) Depending on the type of interest-only home loan that the mortgagee has, they may be able to make voluntary monthly payments off their home loan, in lump-sums, when they have the extra money available, in order to reduce their loan principal and lower their interest repayments. These lump-sum payments may then be able to be re-drawn if needed at a later date should the mortgagee need the money for other purposes;

4) In a normal economy, your homes equity grows despite you not paying off your home loan's principal, this is because home values usually increase at a rate of 3-5% per annum. Therefore if you purchased your home for $500,000 then you can expect it to be worth approximately $650,000 and $750,000 two years later.

The disadvantages of an interest only loan are:

1) Unless the mortgagee makes voluntary repayments that are greater than their monthly interest repayment they will still owe the same amount on their home after five years, which means that the interest the mortgagee is paying will never be reduced;

2) The mortgagee will never actually own their home, unless they pay more than the interest owed monthly;

3) The mortgagor will earn more from the mortgagee's home mortgage than a conventional interest and principal loan, as their debt is remaining constant, unless the mortgagee voluntarily pays off their principal.

Sources:  Quickenloans.com (2008) Interest-only Mortgages - The Facts; available online at http://www.quickenloans.com

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By Jeff Adolph

Residential Real Estate Loans

Many of us have heard of interest-only loans and have possibly even considered using them, but how many of us really know and understand what this type of mortgage is, and what situation they are best suited to?

Simply put, the interest-only mortgage is typically offered over a five-to-ten year term, and allows the mortgagee to pay only the interest monthly on their home loan, rather than the interest and the principal, as conventional mortgages do.

The advantages of an interest only mortgage are:

1) The mortgagee has extra cash monthly to pay off other home expenses and bills;

2) The mortgagee is able to invest the money that they would have paid on their home loan principal in to a high paying account, which will give them a better return for their investment over the long-term;

3) Depending on the type of interest-only home loan that the mortgagee has, they may be able to make voluntary monthly payments off their home loan, in lump-sums, when they have the extra money available, in order to reduce their loan principal and lower their interest repayments. These lump-sum payments may then be able to be re-drawn if needed at a later date should the mortgagee need the money for other purposes;

4) In a normal economy, your homes equity grows despite you not paying off your home loan's principal, this is because home values usually increase at a rate of 3-5% per annum. Therefore if you purchased your home for $500,000 then you can expect it to be worth approximately $650,000 and $750,000 two years later.

The disadvantages of an interest only loan are:

1) Unless the mortgagee makes voluntary repayments that are greater than their monthly interest repayment they will still owe the same amount on their home after five years, which means that the interest the mortgagee is paying will never be reduced;

2) The mortgagee will never actually own their home, unless they pay more than the interest owed monthly;

3) The mortgagor will earn more from the mortgagee's home mortgage than a conventional interest and principal loan, as their debt is remaining constant, unless the mortgagee voluntarily pays off their principal.

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Latest and Greatest Gay Communities in NYC

By Jeff Adolph

Residential Real Estate

Riverdale, NYC and St. George, Staten Island are considered as the latest and greatest in gay community living, where residents live in a culturally diverse location and enjoy beautiful parks and scenery, in a relatively safe environment.

Riverdale in New York City- offers affordable living with 1 and 2 bedroom apartments costing approximately $200-300K, and all within walking distance to the Hudson River and Wave Hill Park (pictured above).

Housing in this region of New York City is typically made up of multi-story apartments and architecturally designed homes built in the 20th century. The population consists of approximately 47,000 people and the area is classified as a middle to upper classed neighborhood.

St. George, Staten Island- is situated on the northeastern tip of the island and is one of the most developed areas of New York City because of its close proximity to the ferry. However, the region declined in popularity in the 1960s when the Verrazano-Narrows Bridge (pictured left), moved the commercial hub of Staten Island to the inner precinct of the island.

Today this region is becoming a popular gay community with many couples electing to buy old Victorian mansions and renovating them to their former glory.

Sources:  Corcoran, Barbara (2008) Q & A with Barbara Corcoran; available online at http://www.realestatechannel.com

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By Jeff Adolph

Residential Real Estate

Riverdale, NYC and St. George, Staten Island are considered as the latest and greatest in gay community living, where residents live in a culturally diverse location and enjoy beautiful parks and scenery, in a relatively safe environment.

Riverdale in New York City- offers affordable living with 1 and 2 bedroom apartments costing approximately $200-300K, and all within walking distance to the Hudson River and Wave Hill Park (pictured above).

Housing in this region of New York City is typically made up of multi-story apartments and architecturally designed homes built in the 20th century. The population consists of approximately 47,000 people and the area is classified as a middle to upper classed neighborhood.

St. George, Staten Island- is situated on the northeastern tip of the island and is one of the most developed areas of New York City because of its close proximity to the ferry. However, the region declined in popularity in the 1960s when the Verrazano-Narrows Bridge (pictured left), moved the commercial hub of Staten Island to the inner precinct of the island.

Today this region is becoming a popular gay community with many couples electing to buy old Victorian mansions and renovating them to their former glory.

Sources:  Corcoran, Barbara (2008) Q & A with Barbara Corcoran; available online at http://www.realestatechannel.com

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Home Raffles -- The Truth

By Jeff Adolph

Unique Home Selling Techniques

In an effort to reduce debt and the burden of having a mortgage that they no longer can afford, many Americans are turning to raffles to find a new owner for their homes.

As real estate becomes more difficult to sell, and the economy becomes tighter, globally, the number of Americans electing to use raffles to raise enough money to pay off any outstanding mortgage debt and rid themselves of the burden of a home that no longer want, is increasing. In fact, in the state of Maryland, home raffles are said to be a 'regular occurrence'.

Typically, the home raffle will be carried out as followed:

1) A certain number of tickets would be sold by a specific date, for 'x' amount each; and

2) The money raised would then pay-off any debt owed on the raffled home, with ownership of the home then being transfered to the winner of the raffle.

However, there are some important points to raffling a home that you must be aware of before you start selling tickets, these are as follows:

• You must be aware of your state's gambling regulations, as, in some states the holding of a private home raffle is illegal, unless you have a nonprofit organization as a partner, and the owner of the property cannot raise more than the homes appraised value.
• The nonprofit organization would need to enter into a contingency contract for the home that is being raffled. The nonprofit organization would then pay for the home from the proceeds of the raffle, with the value of the home being no more than the home's appraised value. This would occur, only if the raffle sold enough tickets to recoup the cost of the house being raffled, and the nonprofit organization would oversee the drawing of the raffle.
• The nonprofit organization would need to get approval from the state in which the home was within, and must also provide minimum and maximum ticket numbers to be sold, along with a date for the draw.
• If the number of tickets sold is not enough to cover the price of the home, and the raffle is not drawn, then all of the ticket buyers must have their money refunded.
• If all tickets are sold and the homes appraised value is reached the nonprofit organization is then able to retain the money made after the cost of advertising has been repaid.  
• A real estate agent or company will be needed to help with the publicity of the home and also address and draw-up any contractual agreements.
• Home winners will be liable for any state taxes that are incurred as a result of the homes sale via raffle.

Sources:  Kurutz, Steven (2008) Desparate Home Sellers Try Hand at Raffles; available online at http://www.seattletimes.nwsource.com

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By Jeff Adolph

Unique Home Selling Techniques

In an effort to reduce debt and the burden of having a mortgage that they no longer can afford, many Americans are turning to raffles to find a new owner for their homes.

As real estate becomes more difficult to sell, and the economy becomes tighter, globally, the number of Americans electing to use raffles to raise enough money to pay off any outstanding mortgage debt and rid themselves of the burden of a home that no longer want, is increasing. In fact, in the state of Maryland, home raffles are said to be a 'regular occurrence'.

Typically, the home raffle will be carried out as followed:

1) A certain number of tickets would be sold by a specific date, for 'x' amount each; and

2) The money raised would then pay-off any debt owed on the raffled home, with ownership of the home then being transfered to the winner of the raffle.

However, there are some important points to raffling a home that you must be aware of before you start selling tickets, these are as follows:

• You must be aware of your state's gambling regulations, as, in some states the holding of a private home raffle is illegal, unless you have a nonprofit organization as a partner, and the owner of the property cannot raise more than the homes appraised value.
• The nonprofit organization would need to enter into a contingency contract for the home that is being raffled. The nonprofit organization would then pay for the home from the proceeds of the raffle, with the value of the home being no more than the home's appraised value. This would occur, only if the raffle sold enough tickets to recoup the cost of the house being raffled, and the nonprofit organization would oversee the drawing of the raffle.
• The nonprofit organization would need to get approval from the state in which the home was within, and must also provide minimum and maximum ticket numbers to be sold, along with a date for the draw.
• If the number of tickets sold is not enough to cover the price of the home, and the raffle is not drawn, then all of the ticket buyers must have their money refunded.
• If all tickets are sold and the homes appraised value is reached the nonprofit organization is then able to retain the money made after the cost of advertising has been repaid.  
• A real estate agent or company will be needed to help with the publicity of the home and also address and draw-up any contractual agreements.
• Home winners will be liable for any state taxes that are incurred as a result of the homes sale via raffle.

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Knowing When to Change Realtors

By Jeff Adolph

Residential Real Estate

When you buy or sell a home a partnership should develop between you and your Realtor so that you work together to achieve a common goal. However, there are times that this is not always the case, and some buyers and sellers feel let down by their Realtor.

If you feel that your Realtor is no longer working for you, or you just don't seem to be seeing eye-to-eye, then it may be time to find a replacement who is switched-on and ready to buy, buy, buy or sell, sell, sell, whichever the case may be.

However, before you consider Realtor shopping, first discuss your concerns with your current Realtor, and assess whether or not he or she is interested in making changes that may be more favorable for your circumstances. If you find that your current Realtor seems disinterested with you and your property then it may be time to move on, after all as an old adage states, 'sometimes a change is as good as a holiday.' Plus, a fresh approach may be all that is needed to sell your home, or find the one that you have been looking for.

Before considering any changes, it is important that you read any paperwork that you have signed with your current Realtor, especially if you have made an agreement with a specific Realtor to sell your home. If your contractual time has elapsed, you are effectively considered as 'out of contract', and you are free to select a new Realtor. However, if you are still within contract, make sure that there are no clauses that prevent you from changing Realtors, or that will incur a penalty payment if you breech your contractual agreement.

If you are unsure of your circumstances then consult a real estate professional who can answer these questions for you -- before you take matters into your own hand -- as you may find this becomes a very costly maneuver.

Overall, remember that buying and selling realty should be a fun and rewarding expereince, not one that you find a drag.

Happy Buying and Selling!

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What is Section 203 (K) Financing?

By Jeff Adolph

Residential Real Estate Finance

If you qualify for a Section 203(K) FHA mortgage, this basically means that a portion of your loan amount must be used to repair and modernize your property, and that not all of the money loaned is to be used to purchase the home. For example - if the property you were interested in purchasing cost $150,000 and you wished to renovate the property which will cost an additional $50,000, it may be possibly to borrow $200,000. However, there are terms and conditions that apply.

A Section 203(K) FHA mortgage loan is a special type of funding that stipulates that a minimum of $5,000.00 of the loaned amount must be used to fix up the property that the loan was acquired for. This means that home buyers are then able to avoid taking out another loan for building repairs to be made.

For a home-buyer to be eligible for a Section 203(K) loan, the property must fit within the following criteria:

1) A single-to-four-family dwelling must be purchased, and this dwelling has to be at least one year in age, and adhere to all zoning laws.

2) A property that represents more than a single-family dwelling that is a group of units for up to four families, must be attached, as in, all units must be joined, and must not be a part of a cooperative.

3) A home that has to be demolished, or razed, in order for rejuvenation of the property to take place, must retain some of the existing foundation.

4) A property that is being converted from a single-family home into a 2, 3, or 4 family residence, or vice versa.

Lending amounts depend on the property in question, however the general rule is that the home-buyer who qualifies for a Section 203(K) mortgage may borrow up to 110 percent of the property's expected market value at the time of work completion; or the purchase price of the property prior to rejuvenation, plus the cost of rejuvenation, whichever, is the lessor amount.

Should you decide that this is the mortgage for you then you need to contact a FHA approved lender, so that you can arrange your loan.

For more information on the Section 203(K) loan, please visit: FHA Programs

Sources: Taylor, Dr. Dan (2008) Section 203(K) Can Finance Home Fix-up; available online at http://www.bankrate.com

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Merry Christmas

Home Equity Basics: What Home Equity Means and How You Can Use It

By Jeff Adolph

Residential Real Estate Terms

Many of us have heard of home equity, but how many of us actually understand what this term refers to, and how it affects us?

Simply put, your homes equity is the value of your home minus the amount that you owe in mortgage repayments. For example - if you have your home appraised and the appraiser estimates that your home is worth $500,000, and you owe $150,000 on your mortgage, then you have $350,000 worth of equity in your home.

This now means that you have $350,000 that you can use to borrow against, using what is referred to as a 'home equity loan'. A home equity loan allows you to then use the equity in you home as collateral or a guarantee for your second mortgage, so that you can then turn your home's equity into cash. This cash is then used to make home improvements or can be spent on other expenses that need to paid. For example- if you had $350,000 worth of equity in your home and you needed $50,000 for a new kitchen, you can then take out a second mortgage which would enable you to borrow the $50,000 for renovation work. This now means that you owe $200,000 on your home and have $300,000 in home equity remaining.

The added bonus when using home equity to improve your home means that you are also adding value to your property, therefore you may find that after you have completed your renovation work that your property's value has increased by $100,000. This means that even though you borrowed $50,000 to make your home improvements, you have effectively doubled your money, because your home's value has now increased to $600,000.

However, it is also extremely important to note that equity is a factor of home buying that is only a favorable bonus if it is used wisely. Using too much of your home's equity can sometimes be liability, especially if your home's value depreciates. Therefore, it is vital that when you consider using your home's equity that you bear in mind that home prices can, and do, fluctuate, and that it is better to have more, than less, equity in your home.

Sources: Bankrate.com (2008) What Home Equity Debit is: Introduction; available online at http://www.bankrate.com

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Refinancing -- Excellent Deals to be Had

By Jeff Adolph

Residential Real Estate Finance

Refinancing when real estate was hot, hot, hot was like water falling off a duck's back, simple and easy. Now that home equity has all but vanished and lending criteria has been tightened, looking to refinance your home has become more difficult. However, there are still some excellent advantages to be had for those homeowners who qualify, these are as follows:

1) Reduced Interest Rates - if you have a good credit score, a sound income, and equity in your home then the chances are highly probable that you can refinance now, when interest rates are at an all-time low, and make yourself a huge saving in the long run.

2) Fixed Rate - if you currently have an adjustable rate mortgage now may be the time to consider seeking out a fixed rate, so that you can lock in a lower mortgage rate and capitalize over the existing term of your loan.

3) Consolidating Debt - if you have many loans and debts to pay off, it may be wise to put these all under the one umbrella, and consolidate your loans. This way your repayments are more affordable and you can pay more off your debts faster, which means that you will reduce the principal of your loan quicker, and save yourself considerably in the long run.

Please remember that if you are considering to refinance your existing loan or loans, make sure that you are aware of all costs associated, as well as the terms and conditions of the new loan, before you sign any contracts. This way you ensure that you are getting the best deal for you and your circumstances without costing yourself more in fees and other hidden charges and costs.

Sources: Holmes, Tamara (2008) refinancing: Great Deals if You Qualify available online at http://biz.yahoo.com

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Freddie Mac Releases Primary Mortgage Market Survey (PMMS)

By Jeff Adolph

Residential Real Estate

According to Freddie Mac's Primary Mortgage Market Survey, which has been in operation since 1971, the 30-year fixed rate mortgage (FRM) has hit an all time low, as it now averages 5.19 percent.

The 15-year FRM follows closely behind with an average of 4.92 percent, and this is the lowest this mortgage has been since mid 2004, 'when it averaged 4.84 percent.'

"Interest rates for 30-year fixed rate mortgage rates fell for the seventh consecutive week, moving these rates to the lowest since the survey began in April 1971," Frank Nothaft, Freddie Mac vice president and chief economist said in a recent RealtyTimes.com interview. "The decline was supported by the Federal Reserve announcement on December the 16th, when it cut the federal funds target to a record low and stated it stood ready to expand its purchases of mortgage related assets as conditions warrant."

For home owners and buyers this means that now may be the time to reassess your mortgage and consider refinancing, or even fixing an adjustable rate mortgage before prices begin to move back up.

Sources: Realty Times (2008) 30-year Fixed Rate Falls to at Least a  37-year Low Do; available online at http://www.realtytimes.com

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