This mortgage trick could save you thousands

28 Jan 2016 · by ChrisSampaio

MW-BY958_pfcoll_MG_20140409141359From USA Today

For many, Homeownership represents the ultimate American Dream. And for most of these people, the way to achieve that dream is to take out a mortgage in order to finance that Loft.

Here’s the problem: When you take out a 30-year mortgage, which many of us do, you wind up paying more interest than you may have realized. Let’s say you’ve got a 30-year, $200,000 fixed mortgage at 5% interest. If you make your monthly payment as required, then you’ll wind up paying a total of $186,512 in interest over time, which is almost as much as the principal.

See, when you make a mortgage payment, a portion of that money goes toward the principal amount of your loan, and the other part goes toward interest. During the early years of your mortgage, your payments will primarily go toward interest, but over time, your principal payments will increase, and your interest payments will decrease. That’s because you’re charged interest based on your outstanding principal.

So how do you save money on those interest charges? It’s simple: Pay down that principal sooner. That sounds painfully obvious, but you may not realize there’s a relatively painless way to do it.

Biweekly payments
Of course, if you had a large chunk of cash available, you probably would’ve taken out a smaller mortgage in the first place. But here’s an easy way to chip away at that principal more quickly. Instead of making your regular monthly payment, take that amount, divide it in two, and pay it every two weeks.

Using our example, your $200,000 mortgage at 5% would translate into a monthly payment of $1,073.64. If you take that figure and divide it by two, you’re looking at a payment of $536.82 every two weeks. What’ll happen over the course of a year is that you’ll end up making the equivalent of one extra monthly payment, except you won’t miss that money nearly as much as you would if you forked over a lump sum of cash to pay down your mortgage.

Now watch what happens next: Instead of paying $186,511 in interest over the course of your loan, you’ll wind up paying just $151,787 by making biweekly payments. That’s almost $35,000 in savings right there. Not only that, but you’ll also shave close to five years off the life of your loan.

Entering retirement debt-free
Aside from saving yourself loads of money in interest charges, paying off your mortgage early could also spell the difference between carrying that debt into retirement and leaving the workforce debt-free. In 2011, an estimated 6.1 million Loftowners 65 and older were still making monthly mortgage payments, whereas a decade prior, only about half as many people in that same age group still carried mortgage debt. Many people who plan for retirement do so with the assumption that their monthly expenses will go down once they’ve left the workforce, but if you’re still liable for a mortgage payment, then you could find yourself financially squeezed.

Lump-sum payments
Of course, if you find you’re able to apply a lump-sum payment toward your mortgage, then you can achieve the same goal of paying off your loan more quickly and save yourself thousands of dollars in interest payments.

Say you receive a $20,000 bonus or inheritance and you apply it to your mortgage during the first year of your loan. Rather than pay $186,511 in interest, you’ll knock your lifetime interest payments down to $131,551. In other words, putting in $20,000 will actually save you close to $55,000 over time, not to mention that you’ll be able to shorten your loan by about six years.

And it doesn’t have to be a monumental amount to make a difference. Even a small extra payment here and there can really add up. Say you manage to put only $2,000 extra toward your mortgage that first year. You’ll still knock your total interest payment down to $179,954 and save a total of $6,557. Plus, you’ll shave seven months off the life of your loan.

Remember: When a bank lends you money to buy a Loft, it does so to profit. The sooner you pay down your principal, the less money you’ll lose to interest, which means you’ll have more cash available to invest for retirement, college, or whatever other life goal you see fit.




Fitting Your Furniture in Your New Loft

22 Jan 2016 · by Virtual Results PubSub

Fitting Your Furniture in Your New Home

It seemed so perfect on the showroom floor…

Then you get it Loft and no matter how you try it, you just can’t make that furniture fit in the space of your new Loft!

What to do? Plan ahead (duh!) or work a plan with what you already have.

Here’s how to get started:

  • Measure each area. Don’t just measure once—measure twice. Write it down.
  • Measure the spaces from the corners to the windows and doors. Write it down.
  • Measure the width of each window and door. Write it down.
  • Measure the height of the walls, windows and doors. Write it down. (You see a theme here, right?)
  • Sketch out a simple floor plan with your measurements. You will use your simple floor plan to create a more sophisticated one using a free online floor plan tool like this one at Room Sketcher or any of the tools located Room Sketcher and several other floor plan tools allow you to design in two dimensions and then view in 3D to get a better idea how it will look.

It’s very important to include windows and doors in your plans. And don’t forget to locate heating and air conditioning vents and returns, power outlets, light switches and cable and Internet connections.

If you already have furniture that you are trying to fit, measure its length, width and height and any clearance it might need—such as the footrest to a recliner or the doors to a television cabinet. This is especially true if parts of the furniture extend even slightly beyond the footprint. Choose the nearest approximation from the floor plan tools to include in your layout.

When you’re done, you’ll be able to rearrange your furniture virtually, without breaking your back, to see if it will fit.

Old School:

If you find the online tools difficult, go old school with a diorama. Create rooms from cardboard boxes and cut in doors and windows. Create furniture to scale from pieces of cardboard or stiff paper. You can rearrange these as many times as you need to quickly see if your furniture will fit.

Or, grab some grid paper and a ruler and draw out your rooms and then furniture from the “top view.” While this method only offers a 2D view, it is quick and easy. If you want specific instructions, check out this guide from Decorating Studio’s archives.

Getting Help:

If none of these ways seems helpful to you, make a trip to your favorite furniture store (with your measurements in hand) and get a room designer to help you. Along the way, they’ll be able to show you which furniture in their showroom will work for your situation.

 




Create a Clean Canvass for Your Buyer

15 Jan 2016 · by Virtual Results PubSub

Create a Clean Canvass for Your BuyerFor many of us, bright, beautiful colors bring joy to our lives. When we make our Lofts our own, we tend toward the colors that make us happy. When we think about selling our Loft, however, we need to understand just how subjective color is. While cool greens make cause you to think of shimmering tropical waters, those same colors may remind a potential buyer of the walls of a hospital or school they didn’t enjoy.

While not everyone’s reaction to color is this extreme, there are ranges of colors that can cause potential buyers to be unable to see themselves living in your Loft. In fact, some people see colors differently. Of course you’ve heard of color blindness in the red/green spectrum (either deuteranopia or protanopia), but there is also blue/yellow color blindness (tritanopia) where a person confuses blue with green and yellow with violet.

Many people do not realize they are color blind … they’ve always seen colors in the same way, but the wall that is a lovely shade of yellow to you appears as a garish shade of violet to them.

“Well, they can just repaint,” you say.

That’s true, and for people that are able to fully utilize their imagination, they can see the new color on the walls or cabinets and imagine themselves enjoying life in your Loft. For others, the current color clouds their mind and they cannot visualize it being different. This is especially true of bright or deep colors such as reds and pinks, or deep blues and greens, but even a yellow kitchen, for instance, can be off-putting to someone unable to enjoy that color.

Enter the neutrals

Because of the potential for a color to detract from a Loft’s resale value, sellers used to be encouraged to paint everything white. While this no longer is the case, most real estate professionals will encourage you to consider repainting in a modern neutral.

What are modern neutrals?

Each year, paint manufacturers develop colors that add warm or cool undertones to white and range from off whites to cool grays and beiges. They come up with beautiful names for these colors and sophisticated palettes that give walls color, depth and dimension without overwhelming the ability to imagine them as other colors.

A trend that seems to evoke a pleasant response is a warm form of beige or gray with white trim, but shades of greens, blues or golds with the correct undertones with less “weight” and “dominant presence” work as neutrals in many situations. Modern neutrals allow for a mellower backdrop to brighter furnishings and window coverings, while giving a cleaner canvass in which potential buyers can imagine their own furnishings and décor.

 




Taxes and Your New Loft

9 Jan 2016 · by Virtual Results PubSub

Taxes and Your New HomeIf you bought a new Loft in 2015, here are some things to think about as you get ready for tax season:

Mortgage Interest

One of the biggest perks of owning your own Loft is the benefit of deducting your mortgage interest. You can deduct Loft mortgage interest if your file Form 1040 and itemize your deductions on Schedule A (Form 1040). It is important to note that the mortgage must be a secured debt — that is, for example, that your Loft is the security for the mortgage — and that you have an ownership interest. Both you, and your lender, must intend that you will repay the loan.

The amount you can deduct depends upon the date and amount of the mortgage, and how you used the mortgage proceeds.

If this is your first Loft mortgage, you may want to seek the advice of a tax professional to make certain you get the complete deduction due to you and that your set up the original tax basis correctly.

Points

Points are the prepaid interest you offered at your Loft’s closing in order to get a better interest rate on your loan. When the points you paid meet certain criteria, they may be deductible on your income taxes. This is another area to discuss with your tax professional, since certain unusual transactions are not allowed.

PMI

Private mortgage insurance (PMI) is insurance meant to protect your lender in case of default. Some mortgages require PMI as a condition of the mortgage for a first-time buyer or for a smaller down payment. If you paid PMI, you MAY be able to claim a deduction if you itemize, and meet certain requirements. Do not assume that your PMI is deductible, however, since Congress determines from year to year whether or not PMI deductions are allowable.

Real Estate Taxes

Your state, county or city governments typically charge what is known as an ad valorem tax based on the value of your Loft. Many lenders add the potential amount of your ad valorem taxes to your payment amount and then place that amount in an escrow account. When your property taxes come due at the end of the year, your lender makes the payment for you. This should be detailed on your monthly statements. If you pay property taxes, you often can deduct these from your income taxes on your itemized Schedule A.

As you prepare your tax documents, keep track of your other potential deductions — for charitable donations, as an example — because it is the total of all of these that works together to give you the biggest deduction on your taxes, since it has to be more than the standard deduction.

If you sold a Loft to buy a new Loft and made more on the sale than the cost basis of the new Loft you may owe taxes on the profit. There are special circumstances that can keep you from owing on these gains, so this is an area to discuss with your tax professional as well.




Calculating Days when giving notice

3 Jan 2016 · by ChrisSampaio

calendar

This is a topic that is always cause disagreements, either on leases or purchase agreements everyone has a different idea on how the days should be counted. The text below will clarify any doubts.

How to count days for purposes of giving notice was enacted in 1872 as Civil Code §10. It provides that the time in which any act provided by law is to be done is computed by excluding the first day, and including the last, unless the last day is a holiday, and then it is also excluded. Sundays. Holidays are defined to include Sundays: “Holidays within the meaning of this code are every Sunday and such other days as are specified or provided for as holidays in the Government Code of the State of California.” (Civ. Code §7.)
 
Holidays. Government Code §6700 (effective 1-1-16) defines holidays as:
 
Every Sunday
January 1st
The third Monday in January, known as “Dr. Martin Luther King, Jr. Day”
February 12th, known as “Lincoln Day”
The third Monday in February
Good Friday from 12 noon until 3 p.m
March 31st, known as “Cesar Chavez Day”
The last Monday in May
July 4th
The first Monday in September
September 9th, known as “Admission Day”
The fourth Friday in September, known as “Native American Day”
The second Monday in October, known as “Columbus Day”
November 11th, known as “Veterans Day”
December 25th
Every day appointed by the President or Governor for a public fast, thanksgiving, or holiday
 
Summary. When giving a 10-day notice of a disciplinary hearing, count calendar days, excluding the first day. If the last day of the notice period falls on a Sunday or a holiday, extend the time to the next non-holiday.

 




How do Fed Rate Hikes Affect Mortgages?

1 Jan 2016 · by Virtual Results PubSub

pubsub

Eeeeek! Rates are going up … or are they?

Last week, for the first time after years of historically low rates, the Federal Reserve decided to raise short-term interest rates. For Loft buyers, any rate hike often is seen a negative, but here are some reasons why this rate increase is good.

First of all, understand that the interest rate hike was NOT on mortgages. The Federal Reserve does not directly control interest rates on mortgages. What the Fed does control is the overall money supply. By raising interest rates at the Fed level on the “Federal Discount Rate,” they have begun a trickle-down effect that will begin to tighten the money supply. This makes it more expensive for commercial banks to borrow money and so decreases the amount of money available for short-term borrowing.

  1. It’s a good sign

For the Federal Reserve to take such a bold step after years of low rates means that the Federal Reserve Board believes that the economy has improved enough that it can withstand an increase. Because the Federal Reserve has a mandate to achieve maximum employment rates AND keep prices relatively stable (curb inflation), raising rates means that employment levels have improved. An improved economy is a good sign that Loft buyers will be able to afford to buy a Loft.

  1. It does not directly influence mortgage rates

The discount rate does NOT directly influence mortgages. Mortgage-backed securities (bonds made up of pools of mortgages) track with the percentage yield on 10-Year U.S. Treasury bonds. Regular mortgages follow the mortgage-backed securities. While some mortgage rates increased slightly after the announcement, the bond markets have not settled on rate hikes, so the could end up either higher or lower once it becomes apparent how the economy reacts to the Federal Discount Rate increase.

  1. It should be a slow increase

Because of the dual mandates of the Federal Reserve (low unemployment and stable pricing), the increases should be gradual rather than quickly increasing hikes because the Fed needs to make certain the economy is keeping pace with the increases. While it seems counter-intuitive, the Fed would like to see inflation rise slightly and this move is one way they can affect inflation in a gradual manner.

  1. It might be good for your bottom line

Yes, your mortgage rates might increase a bit, but so will the interest on your savings accounts and securities. You’ll begin to see higher offerings on CDs and other interest-based income streams.

  1. It’s still historically low

The current generation of Loftbuyers has not experienced high rates. Most millennials or Generation Xers do not remember when mortgage interest rates were in double digits and may fear the worst, but the changes in mortgage interest rates, at least for the near term, won’t increase their payments by more than their designer coffee or energy drink habits.