Lee Morof's Real Estate Blog

When you buy a home, you probably have a budget you will try to stick to. Many people choose a 30-year fixed mortgage, and by the time you pay off the home loan, you should own your home outright. At the same time, you might be thinking about paying off your mortgage more quickly to save money on interest. Even making one extra mortgage payment per year can provide a number of significant benefits.

You Can Build Up Equity Faster

One of the first benefits of making an extra mortgage payment every year is that you can build up equity faster. If you make an extra mortgage payment, that payment should go directly toward the principal. This means you don’t have to worry about paying down any interest with that extra mortgage payment, allowing you to build up equity in your home more quickly. 

You Save Money On Interest

If you make an extra mortgage payment, you pay down the principal more quickly. This means there is a lower remaining balance on which interest might accrue. Even making one extra mortgage payment every year can add up to tens of thousands of dollars in interest saved at the end of the loan. 

You Free Up Financial Resources Down The Road

If you make one extra mortgage payment every year, you could pay off your home loan years in advance. This means you don’t have to worry about making mortgage payments down the road, which can free up financial resources to cover other expenses. For example, you might be able to use the money you would have put toward your mortgage to put a child through college or retire early. Your savings will increase exponentially. 

Consider Making One Extra Mortgage Payment Per Year To Save Big

If you stay in your home for 30 years, there is a chance your income will go up even though your mortgage payments stay the same. Therefore, you may be able to afford to make an extra mortgage payment per year. Making only one extra mortgage payment every year can add up to big savings very quickly. 

When you buy a home, you probably have a budget you will try to stick to. Many people choose a 30-year fixed mortgage, and by the time you pay off the home loan, you should own your home outright. At the same time, you might be thinking about paying off your mortgage more quickly to save money on interest. Even making one extra mortgage payment per year can provide a number of significant benefits.

You Can Build Up Equity Faster

One of the first benefits of making an extra mortgage payment every year is that you can build up equity faster. If you make an extra mortgage payment, that payment should go directly toward the principal. This means you don’t have to worry about paying down any interest with that extra mortgage payment, allowing you to build up equity in your home more quickly. 

You Save Money On Interest

If you make an extra mortgage payment, you pay down the principal more quickly. This means there is a lower remaining balance on which interest might accrue. Even making one extra mortgage payment every year can add up to tens of thousands of dollars in interest saved at the end of the loan. 

You Free Up Financial Resources Down The Road

If you make one extra mortgage payment every year, you could pay off your home loan years in advance. This means you don’t have to worry about making mortgage payments down the road, which can free up financial resources to cover other expenses. For example, you might be able to use the money you would have put toward your mortgage to put a child through college or retire early. Your savings will increase exponentially. 

Consider Making One Extra Mortgage Payment Per Year To Save Big

If you stay in your home for 30 years, there is a chance your income will go up even though your mortgage payments stay the same. Therefore, you may be able to afford to make an extra mortgage payment per year. Making only one extra mortgage payment every year can add up to big savings very quickly. 

When you buy a home, you probably have a budget you will try to stick to. Many people choose a 30-year fixed mortgage, and by the time you pay off the home loan, you should own your home outright. At the same time, you might be thinking about paying off your mortgage more quickly to save money on interest. Even making one extra mortgage payment per year can provide a number of significant benefits.

You Can Build Up Equity Faster

One of the first benefits of making an extra mortgage payment every year is that you can build up equity faster. If you make an extra mortgage payment, that payment should go directly toward the principal. This means you don’t have to worry about paying down any interest with that extra mortgage payment, allowing you to build up equity in your home more quickly. 

You Save Money On Interest

If you make an extra mortgage payment, you pay down the principal more quickly. This means there is a lower remaining balance on which interest might accrue. Even making one extra mortgage payment every year can add up to tens of thousands of dollars in interest saved at the end of the loan. 

You Free Up Financial Resources Down The Road

If you make one extra mortgage payment every year, you could pay off your home loan years in advance. This means you don’t have to worry about making mortgage payments down the road, which can free up financial resources to cover other expenses. For example, you might be able to use the money you would have put toward your mortgage to put a child through college or retire early. Your savings will increase exponentially. 

Consider Making One Extra Mortgage Payment Per Year To Save Big

If you stay in your home for 30 years, there is a chance your income will go up even though your mortgage payments stay the same. Therefore, you may be able to afford to make an extra mortgage payment per year. Making only one extra mortgage payment every year can add up to big savings very quickly. 

Purchasing a house is expensive. Not everyone has the money to put down 20 percent. One of the ways to make it easier to afford a house is to live in a home with multiple generations. Some people decide to move back in with their parents because they might have a difficult time affording a mortgage and student loans. Some parents move in with their children because they have health-related issues that need to be addressed. Now, multi-generational homes are becoming more common.

An Overview Of Multigenerational Homes

First, it is important to define a multigenerational home. This is a home that has two or more generations of adults living in the same building. Parents raising children does not qualify as a multi-generational home; however, if you add grandparents to the mix, now this is a multi-generational home. It is important to take a closer look at some of the reasons why people are living in multigenerational homes. 

The Benefits Of This Lifestyle

There are a number of significant benefits that come with living in a multi-generational home. Of course, it improves the financial situation because there are multiple incomes being put toward homeownership expenses. There are a variety of other benefits as well. For example, living in a multi-generational home improves bonds with family members and makes it easier to care for individuals with health problems. This also makes it easier to help kids go through school, and it can have a positive impact on mental and physical health. 

The House Should Be Larger To Accommodate Everyone

Because there are more adults living under a single roof, it is important to make sure the house is large enough. Everyone deserves to have some level of privacy, and this might mean the house has to have more bedrooms and bathrooms. It might also be helpful to have a basement or a mother-in-law suite.

Consider Multigenerational Homes

In the end, these are just a few of the numerous benefits and considerations people need to think about if they are considering living in a multi-generational home. If you are looking for a way to make the cost of a home more affordable, this could be right for you as well. 

Build Wealth More Quickly

One of the first benefits of owning a second home is that you can build wealth more quickly. One of the major benefits of investing in real estate is that you can leverage the bank’s money to help you build wealth. Even though you may have only put down 20 percent, 100 percent of the property’s appreciation benefits you, as you own the home. If you own a second home, you can build wealth more quickly because you are doing this with two separate properties.

Enjoy Switching Up The Scenery

Many people like to own a second house because it allows them to switch up the scenery. If you live in the northeast, you may want to own a second home in the Southeast. If you live on the coast, you may want to purchase a second property in the mountains. That way, when you are ready for a change of weather or scenery, you can simply go to your second home. 

Generate Another Income Stream

Owning a second home allows you to generate another income stream. When you are not using the house, you can rent it out to other people. Or, you might be interested in the stability of a long-term rental. This is something that you can discuss with a real estate professional. 

Consider Owning A Second Home

In the end, there are numerous benefits that come with owning a second house. If you are looking for a way to diversify your investments, or if you are simply looking for a bit more flexibility, you should consider owning a second home as well. A professional can help you plan your finances accordingly, so you can put yourself in the best position possible to be successful. 

Many people are looking for opportunities to save money on the cost of a mortgage. If you want to save money on your home loan, you might be thinking about refinancing. During the refinance process, you will replace your current home loan with a new mortgage. Some people want to refinance their homes to free up cash for a renovation project, while other people want to pay off their homes sooner. How can you pay off your home loan early through a refinance?

Reduce Your Interest Rate 

During the refinance process, you might qualify for a lower interest rate. There are numerous reasons why you might get a lower interest rate when you refinance your mortgage. The average interest rate may have come down, your credit score may have improved, or your debt to income ratio may have gotten better. If you were due to your interest rate, more of your monthly payment will go towards the principal, shrinking your balance faster. As a result, you may pay off your mortgage more quickly. 

Reduce The Term of the Loan 

If you refinance your home, you might be able to reduce the term of the loan. The term is how many years it takes you to pay off your mortgage. For example, you may be able to reduce your 30-year mortgage to a 15-year mortgage. If you shorten the term of your loan, you may qualify for a lower interest rate, which can help you save money; however, directly shortening the term of the loan could cause your monthly payments to go up. You could work with a professional who can help you with the math. That way, you understand exactly how much you owe every month. 

Consider Paying Off Your Mortgage More Quickly

If you want to save money on interest during the life of your loan, one way to do so is to pay off your mortgage faster. You might be able to do this if you refinance your home loan. Reach out to a professional who can take a look at the balance of your home loan. You might qualify for a refinance that can help you save money on your mortgage. 

One of the most common questions homeowners have before listing their home for sale relates to the selling price. Understanding the value of the home is about far more than just comparing the square footage of the space with other homes that have recently sold in the area. While there are many factors that will play a part in a selling price, location is an important factor for several different reasons.

Neighboring Properties

The properties that are located next to the home for sale are critical to the property value. For example, a home that is located next to a park or a beautifully maintained home may have more appeal than a home located next to a strip center or a gas station. Even with homes that are located just a block or two apart, this difference in adjacent properties can have a dramatic impact on properties values.

Safety Concerns

When a home is located in an unsafe area or an area that is riddled with crime, safety concerns can lower property values. Many home buyers will review crime statistics about a location before making a buying decision, and high crime areas are far less appealing to buyers. Properties are ultimately only worth what someone will pay for them, and buyers may overwhelming opt to purchase homes in safer locations unless the sales price is lowered.

Vehicular and Pedestrian Traffic

There are some advantages to being in an area with heavy vehicular or pedestrian traffic, such as if you live in an urban area and are searching for a property that offers this lifestyle. When a home is located in heavily trafficked areas in a suburban or rural location where a quieter way of life is desired, these can be drawbacks that impact the selling price. If one home is located on a busy street corner and another similar home is located a few blocks away removed from traffic, the home with a more desirable location will typically have a higher selling price.

Desirability is often directly related to property location, and homes in more desirable locations will therefore have a higher selling price than those in an undesirable location. For those who are thinking about selling a property soon and who want to learn more about its value, a consultation with your trusted real estate agent can provide you with helpful information.

People look at pets as members of their families. They love and cherish them. At the same time, pets do not necessarily go well with rental properties. Even though their owners love them, the property owners generally do not. Pets can damage the property, stain the floors, and scratch up the furniture.

Did you know that 72% of all renters own pets?  Therefore, property owners who want to maximize their income need to create pet-friendly rentals to drive up demand. What are the biggest benefits, and what are a few ways to do exactly that? 

The Benefits Of A Pet-Friendly Rental

There are several reasons why property owners should create a pet-friendly rental. The biggest reason is that this leads to a more diversified tenant pool. Many people are looking for a property that welcomes pets. If property owners have a rental property that is pet-friendly, they will have more interest, increasing the rent they might charge.

Furthermore, pets are not the most common source of property damage. Adults and children tend to cost far more property damage on a per-month basis than pets. Therefore, property owners should not worry as much about dogs, cats, and other animals damaging their properties. 

How To Create A Pet-Friendly Rental

There are a few ways property owners can make their rental properties pet-friendly. First, it is important to think about the floors. Some floors, such as carpet, are not friendly to pets because they stain. Instead, linoleum, vinyl, and laminate floors are friendlier to pets, and they are far easier to clean. 

It might also be helpful to invest in pet doors and gates. This makes it easier to divide the property and makes it easier for pets to come in and out.

Consider Asking For A Pet Deposit

Property owners should also consider asking for a pet deposit. It is not unusual to ask for a security deposit, but owners might want to ask for an additional deposit for pets. That way, owners already have the money on-hand if they need to do some extra cleaning or make some repairs after having a pet at the property. Creating a pet-friendly rental can lead to extra income.

Buying a house is an exciting time, but homeowners also need to make the best financial decision to meet their needs. One of the biggest decisions potential homeowners will face is how much money to put down.

A down payment is the amount of money that homeowners pay upfront when they purchase a home. Many homeowners believe they need to put down 20 percent; however, this is not always the case. What do homeowners need to know about putting a down payment on a house? 

20 Percent Is Not Always Required

The reason why homeowners often believe they need to put down 20 percent is that lenders will often require a 20 percent down payment to avoid paying PMI. PMI stands for private mortgage insurance. If a homeowner puts down less than 20 percent, the lender takes on significant risk if the homeowner defaults. Therefore, the lender may require the homeowner to purchase PMI to protect the lender against the risk of default.

Homeowners might be able to secure a loan with 10 percent down if they are willing to pay PMI. First-time home buyers might be able to secure a home loan with as little as 3.5 percent down if they go with an FHA loan.

The Relationship Between Down Payments And Interest Rates

Homeowners might want to put down more money to earn a lower interest rate. Securing a lower interest rate could save homeowners tens of thousands of dollars over the life of the loan. If homeowners put down more money, the lender doesn’t take on as big of a risk. Therefore, the lender might be willing to charge a lower interest rate. 

Work With A Professional 

Ultimately, the size of the down payment is one of the biggest decisions potential homeowners have to make. It can take a long time to save up 20 percent for a home, but this is not always required. Homeowners need to know whether they need to pay PMI if they do not put 20 percent down, and they need to understand how the size of the down payment will impact the interest rate on a loan. It is a prudent idea to consult with a professional when deciding how much money to put down for a house.

Last week’s economic reporting included readings on construction spending, written testimony from Fed chair Jerome Powell and data on public and private sector jobs and national unemployment. Weekly readings on mortgage rates and jobless claims were also released.

Fed Chair Hints at Rate Hikes in Written Testimony

Federal Reserve Chairman Jerome Powell indicated that consistent rate hikes of the Fed’s target interest rate range will likely occur throughout this year, but he said that the Fed would proceed carefully. Analysts interpreted Mr. Powell’s remarks to mean that he would limit each rate hike to 0.25 percent but could be higher depending on the pace of inflation.

Inflation rose by 7.50 percent year-over-year in January; this was the highest inflation rate since 1982. Chairman Powell said the Fed wanted to prevent persistent high inflation while promoting sustainable economic expansion and a strong labor market. The war in Ukraine could lead to faster inflation as Russia is the world’s second-largest producer of oil.

Mortgage Rates, Fall, Jobless Claims Mixed

Freddie Mac reported lower average mortgage rates last week as the rate for 30-year fixed-rate mortgages fell by 13 basis points to 3.76 percent. Rates for 15-year fixed-rate mortgages were also 13 basis points lower at 3.01 percent and rates for 5/1 adjustable-rate mortgages averaged 2.91 percent and were seven basis points lower on average. Discount points averaged 0.80 percent for fixed-rate mortgages and 0.30 percent for 5/1 adjustable-rate mortgages.

Initial jobless claims fell last week with 215,000 new claims filed as compared to 233,000 jobless claims filed in the previous week. 1.48 million continuing jobless claims were filed last week as compared to the prior week’s reading of 1.47 million continuing claims filed.

Jobs Data Shows Mixed Results

Public and private sector jobs data and the national unemployment rate reflected a strong labor market. The government’s Non-Farm Payrolls report tracks public and private-sector job growth and reported 678,000 jobs were added in February as compared to expectations of 440,000 jobs added and January’s reading of 481,000 jobs added.

The ADP jobs report includes only private-sector jobs data; 475,000 jobs were added in February as compared to predictions of 400,000 jobs added and January’s reading of 509,000 private-sector jobs added. The national unemployment rate dropped to 3.80 percent; analysts expected an unemployment rate of 3.90 percent and January’s jobless rate of 4.00 percent.

What’s Ahead

This week’s scheduled economic reporting includes readings on job openings and quits, inflation, and the University of Michigan’s preliminary reading on consumer sentiment. Weekly reports on mortgage rates and jobless claims will also be released.