How Much Home Can I Afford?... So Play House

How Much Home Can I Afford?... Play House

I am a very big fan of Money Queen Suze Orman. On one of her recent shows, she had a wonderful idea about figuring out how much home can a new buyer afford. Today I'm going to give you the tools to figure that out by "Playing House."

Step #1
* Choose how much home you want to buy.
* Only start this process if you have 20% down on this home of your choice.
* Go online and use a mortgage calculator and online resources to figure out the following monthly expenses:
       1. 30-year fixed rate monthly mortgage payment
       2. Monthly Property taxes
       3. Monthly Association Fees, (If it's a Condo, Mobile Home or PUD)
       4. Monthly Home Owners Insurance
       5. Monthly Home Maintenance (Yard, Periodic Painting, Termite Repairs, Roof, etc.)
*Total up all the costs for items 1-5, under step #1, and this will give you the total monthly cost of owning the home.

Step #2
* Use your total at the end of Step #1 and subtract it from the monthly rent you currently pay. This will give you the additional amount you currently would have to pay for a home of this price.

Step #3
* Start saving the additional amount you figured out at in Step #2 for 6 months.
* This will help you see what it feels like to own your own home.
* If this amount is too difficult, then you are purchasing too much house.
* If it's easy, you now have 6 months of saving to use towards your closing costs and down payment and you should call your favorite realtor, me, to begin your home search.

I hope this was helpful! This will also help you see if renting is comparable to the monthly cost of buying a home in this current market. Please comment below to give me feedback on this blog post.

"A Realtor that knows homes." Traci Ferguson 805-235-6396 traci@traciferguson.com http://www.traciferguson.com License #01875751, ecoBroker #16082

Refinancing Your San Luis Obispo Home Today Could Mean BIG Savings

Refinancing Your San Luis Obispo Home Today Could Mean BIG Savings

I'm sure you've heard interest rates are low and dropping. But what does that mean to you? Why should you care? By doing a quick mortgage calculation to see what your savings could be, it could mean extra money monthly for you and your family. I recently had my home refinanced (a Refi) and I'd like to to fill you in on the financial benefits.

We live in San Luis and our mortgage loan wasn't bad, 5.375%, but the interest rates that are currently available are like borrowing free money. There are rates in the low 3%'s that could save us hundreds of dollars a month. Here's a simple example to show you how a small drop in two percent of our mortgage interest saved us a ton of money.

On our mortgage loan of $400,000 for 30 years at 5.375% our monthly mortgage, not including our Property taxes, was $2,239.88. The loan for the same amount at an interest rate of 3.375% our monthly mortgage is now $1,768.38. The 2% difference in the interest rate is saving us monthly $471.50.  That is a large amount of savings a month!

A good rule of thumb is if your current interest rate on your home is more than 1% higher than the current rates, it's financially worth it to Refi your home. You have a loan for 4.25% and rates are currently at 3.25%, call your broker. Many brokers can also give you estimates on what your monthly savings would be and what the cost is to Refi. On our Refi the cost to do it was added into the mortgage loan so we had no out of pocket expenses. A huge plus. Call your mortgage broker today to see if you can save money on your interest rate. You will be so glad you did.

If you are looking for a great Mortgage Broker to help you with your Refi, please email me for a referral in your area. I'm here to help!

Click here to access a link to a Mortgage Loan Calculator to see how much you can save! You're Welcome...

"A Realtor that knows homes." Traci Ferguson 805-235-6396 traci@traciferguson.com http://www.traciferguson.com License #01875751, ecoBroker #16082

What Income Should You Have to Get The Home You Want?

Your level of income is only one piece of qualification puzzle when you are in the market for the home of your dreams. Lenders will review other things, such as your credit score and your total amount of debt, when considering you for a loan. Remember, your debt takes away a big part of your income. So even if you meet the lenders general guidelines for income level, you'll be denied if you are paying too much money toward your other debts (because you would have less money left over each month to put toward a mortgage payment).

There are a few factors, but you can use 30% as a rule of thumb. In other words, most lenders want your annual income to equal around 30% of your mortgage amount. So based on this rule of thumb, if you wanted to qualify for a mortgage loan of $300,000, you would need an annual income in the neighborhood of $90,000. If a married couple makes $45,000 each, they should qualify for a $300,000 loan. Your lender can work with your individual situation to get you the largest loan possible.
There are numerous types of loans and ways to qualify. Some first time buyer loans make it very easy to qualify with little money down. Some FHA loans require as little as 3-4% down payment.

It's important to shop around for loans and lenders. Large banks may offer different loan packages than smaller local banks or brokerages. It's important to shop for your loan and see what choices you have. Ask your Realtor for referrals to lenders in your area.

We strive to make it easy for you!
Visit my Mortgage Calculator page filled with additional information.
For more information about Real Estate on the Central Coast, please contact Traci Ferguson by E-mail or by phone directly at 805-235-6396.

Buying a Home in San Luis - Tax Benefits

As a home buyer in SLO you have tax benefits that will save you money every year. Your mortgage interest and real estate taxes are tax deductible and anyone with a mortgage can enjoy this tax benefit.

During the early years of the home mortgage, most of your monthly repayments go towards your interest, with little payment towards the capital. Tax benefits are therefore very useful for first-time home buyers, especially during the early years of acquiring the mortgage. The early part of your mortgage payment is primarily paying on the interest of your loan. This interest payment is fully tax deductible. As you pay more on the amortized home mortgage over a longer time frame, more of each monthly payment goes towards paying the principle, and less towards interest. This means that with time, you lose some of your interest write-off as your equity in the property increases.

It is important for you to note that you can take these tax deductions if you change from standard deduction, which all tax payers are entitled to, to itemized deductions. In the case where your itemize deductions, including home mortgage interest and property taxes, do not exceed the standard deduction amount, it is better for you to take standard deduction.

The following three components of your home mortgage are tax deductible:

1. Interest on your home mortgage
2. Property taxes
3. Loan points for a purchase mortgage fully deductible in the year that they are paid. It is noteworthy that in refinance, the points are written off in increments over the term of a home mortgage. (See my blog post on When to pay down points)

We strive to make it easy for you!
Visit my Mortgage Calculator page filled with additional information.
For more information about Real Estate on the Central Coast, please contact Traci Ferguson by E-mail or by phone directly at 805-235-6396.

Why Would You Pay Down Points?

Paying Points
As a new home buyer you have to make many decisions. Buying a home can feel like a daunting task. As your real estate agent, I am here to guide you to get the information you need. You have many decisions to make including what is the best possible percentage rate can you get to keep your mortgage payment low. I have had some clients ask about points, what the benefits are and when is the best possible time to pay them.

Lets start with the definition:
The term points has multiple meanings in the mortgage world. Mortgage points can refer to loan origination fees (fees charged by the underwriter) or discount points (also known as loan discounts). Typically, a point is equal to 1% of the purchase price. By using a Mortgage Calculator you can see how paying money upfront to pay down your interest rate can lower your mortgage payment. The difference in savings over the life of the loan can make paying points a benefit to the borrower. Using a Mortgage Calculator can determine what and how many points you would need to pay down to get the interest rate and monthly payment you are looking for.

When should you pay down points?
If you intend to stay in your home for an extended period of time, it may be worthwhile to pay additional points in order to obtain a lower interest rate. The amount of money you save over an extended period of time will off set the upfront costs you made at the beginning.  Paying points on a short term investment or residence doesn't make financial sense to do.

For more information, or to use my Mortgage Calculator, click here to begin. Or visit my website for additional Mortgage Calculators.

Traci Ferguson
805-235-6396
traci@tracifergsuon.com
http://www.traciferguson.com

Buyer Resources - Mortgage Calculator

As a buyer in San Luis Obispo you need to have all the information you can to make an informed decision. My job is to help you get the information you need.

I recently have added a Mortgage Calculator to my site, and not just one type of mortgage calculator mind you!
When you go to my site, http://www.traciferguson.com and click on the center button," Real Estate Videos & Info" scroll down to Free Mortgage Calculator. Or click here to see a list of calculators available to you.

How much will my payments be?
How long will my mortgage last if I pay more every month?
How much income to qualify?
How much home can I afford?
Should I pay points?
Should I refinance?
What are the tax benefits of buying?
Standard vs. Bi-weekly
What is my APR?
Interest-Only Payment Calculator        

If you are considering buying in San Luis check out my site and the Mortgage Calculator page.Get a feel for what your payments will be, know what to expect and how your money can work for you. If you have any questions or would like to discuss any of these calculators I would be happy to answer.

Traci Ferguson
805.235.6396
traci@traciferguson.com