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Is This Your Situation: Buying Your First House?

1/04/2018

Owning your own home has been part of the American Dream for years. The pride of ownership and sense of belonging somewhere have been strong factors in motivating over 60% of all households to own their own homes. In addition, there can be true financial rewards from home ownership. But, not always.

 

How Much Home To Consider
Buying and owning a home is expensive. You will need funds for a down payment (perhaps 20% of the purchase price) and any mortgage closing costs before you buy. After you buy, you will have monthly mortgage payments, property taxes and insurance. Then, there are the other expenses like utilities and maintenance. Finally, if you are like most homeowners, you will want to furnish it. All of these items cost money.

Deciding how much to spend for a home can be complex. You probably want as nice of a home as possible, but you want to be able to afford it. What you can afford depends on the size of your mortgage, mortgage rates, costs of home ownership, your other expenses and your income. One rule of thumb to consider is that the total of your mortgage payment, property taxes and insurance should be no more than 28% of your household income. Here is a worksheet and a table of mortgage payments to help with the calculation.

Sample Monthly Mortgage Payments for a 30 Year Fixed Mortgage

Monthly Mortgage Payments at different interest rates (30-year fixed rate mortgage)
Mortgage Interest Rate
Mortgage Amounts
3.25%
3.50%
3.75%
4%
4.5%
5%
$50,000
$217.60
$224.52
$231.56
$238.70
$253.34
$268.41
$75,000
$326.40
$336.78
$347.33
$358.06
$380.01
$402.62
$100,000
$435.20
$449.04
$463.12
$477.41
$506.69
$536.82
$150,000
$652.81
$673.57
$694.67
$716.12
$760.03
$805.23
$200,000
$870.41
$898.09
$926.24
$954.83
$1,013.37
$1,073.64

Many financial websites include mortgage calculators to provide more precise payment levels and you can also calculate mortgage payments for other lengths of mortgages. You will need to adjust the worksheet below for your particular tax situation.

Worksheet

Sample Sample
Mortgage amount $100,000 $150,000 $ $
Monthly payment x 12 ($477.41 x 12) = $5,729 ($716.12 x 12) = $8,593
Property taxes $3,500 $3,500
Insurance $1,500 $1,500
Total $10,729 $13,593
Household income $50,000 $50,000
Times 28% x.28 x.28 x.28 x.28
What you can afford $14,000 $14,000
Difference +$2980

Affordable

+$407

Stretching affordability

+ or – + or –

The sample is based on buying a $175,000 house with a 4% 30 year mortgage. As the chart shows, this person can probably comfortably afford buying the home with a much larger down payment. As a practical matter, the person could probably be comfortable with a mortgage in the $125,000 to $130,000 range. Of course, this is just a guideline for a rough estimate. Tax laws are always changing, and your situation may vary.

Tax benefits from home ownership
Many taxpayers find that the interest on their mortgage and the annual property taxes they pay are large enough to enable them to itemize their deductions instead of using what is commonly referred to as the standard deduction. For many homeowners, their interest and property taxes exceed those amounts. Be sure to keep track of when you pay your property taxes. Some taxing districts have due dates close to the end of the year, and you must have paid the tax before December 31 to get the deduction.

The IRS also allows you to exclude any gain on selling your house up to $500,000 if you file a joint income tax return and meet certain requirements. You may want to investigate these tax advantages further or talk to a tax accountant to completely understand the tax advantages. This is especially important now, because the new tax reform law has changed the tax landscape for homeowners in important ways.

Potential gains from selling your home
The housing market in many areas of the country is currently suffering. While that may be bad news for existing owners, it can be very good news for those buying their first home. When the housing market improves, and the odds are good that it ultimately will, the value of your home may rise.

Summary
If you are like millions of others, owning your own home is a primary financial and lifestyle goal. The pride of home ownership and the financial rewards are attractive. Just make sure you understand that there can be some downsides before you make the decision.

Want advice based on your unique situation and needs? Give me a call today.

5 DIY Projects Under $1000 You Can Do This Weekend

1/01/2018

Your home is your refuge, and it’s important to take stock occasionally and consider some improvements, even if you are not planning to sell.

Home improvement projects don’t have to break the bank or take weeks of your time. There are plenty of projects you can handle yourself in just a weekend. Here are 5 suggestions that are all smart improvements and will not cost more than $1,000.

1. Freshen Up Your Entry 

If the first sight that meets your eyes when you arrive home is a tired front door with zero curb appeal, it’s time to freshen things up. An inviting entrance improves the entire house, and it’s not hard to create.

Decide whether you need to replace your front door entirely. It’s often enough to apply fresh paint and hardware to your existing door. Consider putting your house number on the door and adding an attractive, updated light fixture. Depending on the space, you might consider adding some flowers or greenery in an attractive planter, some comfortable seating or a colorful doormat.

2. Update Lighting

Changing out light fixtures is a quick DIY project that instantly improves the look of a room. Create a harmonious feel by selecting fixtures that complement each other and your home’s overall style.

For under-illuminated areas, add a handsome table or floor lamp. Overhead lighting can be too harsh for most rooms, so make your home comfortable and functional. If you’re on a really tight budget, try spray-painting some of your existing fixtures.

3. Modernize the Bathroom

The bath is a great place to look for a quick project, and modernizing this small space can be easy and fast. Even if you need to hire a plumber for some jobs, you can still get a lot done for under $1,000.

You can put in a beautiful new vanity within this budget. Or maybe you just need to update the hardware. Put sleek stainless pulls on drawers and cabinets, add a wonderful new showerhead for your morning drench. These small improvements add up to a big impact.

4. Replace Kitchen Hardware

You’ll be amazed at the difference you can make in your kitchen by just changing the cabinet and drawer hardware. The cabinetry makes up the bulk of your kitchen space, so this change is really dramatic. You’ll find hardware in a huge range of styles and price points. Look at your favorite home store, or shop online.

5. Add Storage

As George Carlin famously said, your home is a “place for your stuff.” So this weekend why not create an attractive place for your stuff? Adding shelving is a very doable DIY project that will come in well under $1,000. You can create your own shelves or buy them ready to hang for under $100. Then choose some of your favorite “stuff” and put it on display!

These improvements will make your home a little more stylish and give you a sense of accomplishment. Give yourself the gift of better surroundings, and enjoy your home more every day.

June 30, 2014

As a Realtor, it seems that I am a continuing source of recommendations on where to eat!  Not a problem, because I do have my spots and next to Real Estate, one of my favorite things to talk about.  Friday night we decided it was time to re-visit Brewburger’s Pub & Grill, located just off Jacaranda Blvd on 370 Commercial Court near the Cracker Barrel.

I’m a creature of habit and once I happen on to a good dish, it’s pretty much the only thing I order, for years!!  In this case, I hadn’t had the Backyard Barbeque Burger in almost a year because it wasn’t on the menu.  It’s on the menu again and that’s what I ordered.  There’s nothing like it in Venice!  This is a 1/3 lb burger with a healthy helping of pulled pork on top, with BBQ sauce on a Pretzel Bun.  They normally serve it with the slaw and onion ring ON the burger, but I had mine on the side.  This picture hardly does it justice, but this is Heaven on a plate!

 

burger1

 

Brewburger’s Pub & Grill in Venice is definitely a local favorite and for those in-the-know.  If you haven’t tried it, you should.  In fact, let me know what some of your favorite dishes are and let me know?  Maybe I’ll come out of my “safe zone” and try them!

burger2        burger3

 

Existing Home Sales up by 4.9%

Very good news from the National Association of REALTORS!  Markets are steadily moving in a positive manner and that’s good for all of us.  This is the National report, for a local report of the Venice area, please go the the Videos/Blogs tab on my website and click on Market Updates.

 

Existing-home sales rose strongly in May, with all four regions of the country experiencing sales gains on the previous month, according to the National Association of REALTORS®.

Total existing-home sales (comprised of completed transactions on single-family homes, townhomes, condominiums and co-ops) rose 4.9 percent to a seasonally adjusted annual rate of 4.89 million in May from an upwardly-revised 4.66 million in April. This was the highest monthly rise since August 2011, but existing home sales remain 5 percent below year-ago levels.

 

For those of you who want to hear all the details and directly from Lawrence Yun, NAR chief economist, click on the video.