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The Reason They're Called Benefits

by The Mike Parker Team

 

 

The Veterans Administration guarantees home loans for eligible veterans.  It is considered an attractive loan because the veteran can purchase the home with no down payment up to specific loan limits and no mortgage insurance. This makes the monthly payment considerably lower.

Let’s assume a buyer wants to purchase a $200,000 home and can get a 4.5% interest mortgage for 30 years.

A FHA loan would require a $7,000 down payment plus $3,377.50 in up-front MIP which can be rolled into the mortgage. The monthly mortgage insurance premium would be $221 per month for a total payment of $1,215.94.

The VA loan doesn’t require a down payment. There is a 2% VA funding fee that can be rolled into the mortgage which would make the principal and interest payment on $204,400 much less at $1,035.66.

The revised loan limits for 2014 are published by VA and can change each year especially based on high-cost areas. However, a lender can allow a home purchase in excess of these amounts with a 25% down payment on the amount above the limit.

If a purchaser wants to buy a $600,000 home in an area where the VA limit is $417,000, the lender could require a $45,750 down payment and make a $554,250 mortgage. In this example, the purchaser is able to get in for less than 10% down payment and no mortgage insurance.

Veterans with the available funds for a down payment should compare all loan products to consider which will provide the lowest cost of housing. A skilled real estate professional and a trusted mortgage advisor can be valuable resources. 

Indecision Costs

by The Mike Parker Team

Indecision Costs

 

More money has been lost to indecision than was ever lost to making the wrong decision.  The economy and the housing market have caused some people to take a “wait and see” position that could cost them in lost opportunities as well as almost certain higher costs in the future.

To illustrate what the opportunity cost might be, let’s compare what the value of the down payment two years from now would be if it was invested in a certificate of deposit, the stock market or used to purchase a home today.

A 3.5% down payment on a $175,000 home is $6,125.00.  If it was invested in a CD that would earn 2%, a person would have $6,372 in two years.  The earnings would be taxed as ordinary income tax rates.  It wouldn't earn much but it would be safe and secure.

The same amount would grow to $7,013 in the stock market if you picked the right stock or fund and it yielded 7%. The earnings would be taxed at the long term capital gains rate.  The return could be greater but so is the risk involved.

If this person were to purchase a home today that appreciated 2% in value over the next two years, the equity in the home would grow to $18,769 due to value going up and the unpaid balance going down.

 

 

 

  

The question, we all must ask ourselves is “where should our money be invested?”  Try Your Best Investment to see the difference it will make based on your price range, down payment and earning rate. 

Buying a Home...the Cost of Waiting...

by The Mike Parker Team

A terrific article we found from the authors of "Keeping Current Matters."  This article explains the costs of waiting to buy a home in today's real estate market.  

 

Buying a Home: The Cost of Waiting | Keeping Current Matters

Whether you are a first time buyer or a move-up buyer, you should look at the projections housing experts are making in two major areas: home prices and mortgage rates.

PRICES

Over 100 economists, real estate experts and investment & market strategists wererecently surveyed. They were asked to project where home prices were headed. The average value appreciation projected over the next twelve month period was approximately 4%.

MORTGAGE INTEREST RATES

In their last Economic & Housing Market OutlookFreddie Mac predicted that 30 year fixed mortgage rates would be 4.8% by this time next year. As of last week, the Freddie Mac rate was 4.14%.

What does this mean to you?

If you are a first time buyer currently looking at a home priced at $250,000, this is what it could cost you on a monthly basis if you wait to buy next year:

First Time Home Buyers Cost of Waiting | Keeping Current Matters

If you are a move-up buyer currently looking at a home priced at $500,000, this is what it could cost you on a monthly basis if you wait to buy next year:

Move-Up Buyers Cost of Waiting | Keeping Current Matters

Bottom Line

With both home prices and interest rates projected to increase, buying now instead of later might make sense.

If you are looking to buy or know someone who is, please contact The Mike Parker Team today.  

Displaying blog entries 1-3 of 3

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Photo of Mike Parker - CRS Real Estate
Mike Parker - CRS
HUFF Realty
60 Cavalier Blvd.
Florence KY 41042
859-647-0700