Secrets to the Timeshare Presentation
Timeshare presentations include free cheap vacations, free gifts or free meals, including champagne breakfast, but not so fast. They are not really free. Because of the high pressure sales it is essential that you do your homework before attending a timeshare presentation, and please don’t buy on a whim.
The most important aspect of a time share presentation is to understand what you are NOT buying.
Understand the true meaning of a timeshare and read the contract before you sign under pressure. Most timeshare buyers buy under pressure while on vacation or walking through a mall, to get an invite to a high pressure sales presentation. I have spoken to many who have done this very thing and regretted it later.
The most common question I am asked is, “Should I buy a timeshare to save money on taxes and own a wonderful place to vacation”?
I talked to a friend who did tax audits and was assigned to an 8 inch thick stack of timeshare tax foreclosures. This prompted me to look further into the timeshare craze. Later, even going as far as to spend a week in a timeshare condo owned by a friend, I and a friend, attended a high pressure sales presentation ourselves.
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The Definition of a Timeshare
The first thing you need to know is that when you purchase a time share you are purchasing the right to use a vacation room or condo typically for 1 week a year. This is if you purchase 1 unit. The quality of available condos go from type A to type D. A, of course being the nicest and best equipped.
You do not own a share of the building, you do not own a room, and you definitely don’t own the land that the condo is built on. What you buy is one unit of time or one week of time. Some people buy two weeks of time.
Typical Timeshare Cost
Understand what it means to sign a timeshare contract; you are promising to pay in full the contract price of the time share, the interest payment, and the yearly maintenance fee.
The payment is usually from 8-12 years. The yearly tax and maintenance cost is for life.
A lady ask me at a conference, “why did my timeshare company send me to collections”?
I told her, “you did not understand that you were purchasing the timeshare with a loan and lifetime maintenance cost when you signed the documents”. Of course, she said no.
For some strange reason most timeshare presentations don’t make it clear that the buyers have to pay maintenance for life, and the maintenance goes up over time. They assume you know you are signing for a loan.
When You Don’t Pay The Time Share Loan Principle And Interest Payments
If you don’t pay the time share principle and interest payments you will be sent to collections. When the balance is not paid from collections, you will be foreclosed on. If your time share is paid off and you do not make the yearly tax and maintenance cost your time share will be sold for back taxes.
How Most Buyers Find Out About Timeshares
They go on vacation, on a honeymoon, or just stay at a resort hotel. The company who owns the hotel may also own a timeshare unit building.
They will offer a free $100 bill, lunch, or dinner to coerce you into listening to a timeshare presentation, which is usually a high pressure sales presentation.
The company gets back the “free stuff” many times over when you make payments on the timeshare loan and the lifetime tax and maintenance cost. So, once again, you learn, there are “no free lunches”.
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A Motivating Factor For Buying a Timeshare
High sales tactics make some buyers think they are actually purchasing ownership in a condo unit. Some people are motivated by the false tax savings.
Because of the ease at which you can purchase a timeshare many people who buy them do not itemize for tax savings. Also, they are in too low a tax bracket to actually receive a savings from the timeshare. The tax savings are tiny, almost non-existant.
For those in higher tax brackets the tax savings on a timeshare is too small to make a difference. Another reason people buy timeshares is because they enjoy the vacation swaps. This is when you can swap timeshares with others, to vacation in different locations. Some timeshare presentation vacations sales are simply fake.
When Buyers Falter On Their Time Share Payments
Judging from conversations I have had with timeshare owners many don’t understand their obligations because:
1. They signed up under pressure – did not read the contract.
2. The sign up was quick and didn’t understand what they are buying.
3. Some are young and gullible, so they sign up without the knowledge of contracts.
4. Many people don’t understand that they have to pay taxes and maintenance cost every year for life. This is necessary to use the timeshare “time” alloted to them for the year.
Concentrate on buying “actual” real estate, learn the best way
The best way to get out of your timeshare contract during or after your vacation is to realize you usually have a 3 day right of rescission on contracts. That must be in writing, preferably notarized, and sent next day mail, certified. Rarely, does anyone realize this, or use this tactic.
Typical charges of a Timeshare
I have friends who bought a time share 16 years ago, they said they purchased theirs for $17,000. Most of the 16 years their yearly tax and maintenance costs were $500 per year, a year ago it changed to $1000 per year. The timeshares are much more expensive now.
That is a class A Timeshare, the highest value. Let me remind you again that you are “only buying” time to use a space, “not” any real estate.
Currently, a typical Class A time share is in the area of $25,000 principle or more, plus interest, and $1000 per year (lifetime) payments for tax and maintenance. There are different packages available.
Selling A Timeshare Condo
Selling a timeshare is difficult because you don’t have the same high pressure sales tactic abilities that enabled you to sign. The market for used timeshare contracts is tiny almost non-existant. You are competing against current new timeshare sales. The first place you should start to sell your timeshare is to contact your timeshare company “in writing”, that you purchased from. They will usually charge you a small fee to take it back.
There are companies who promise to “exit your timeshare contracts”, and they may be helpful. Do your homework, and make sure the company is legitimate. In recent news reports many who have used these companies say were ripped off, and their contract was still in tact after they paid the company.
The organizations representing timeshares say it is best to negotiate directly with your timeshare company to get released from your contract.
You do not have the expertise to do a timeshare presentation on timeshare vacations – to sell it on your own. Don’t make an unwanted timeshare a lifetime timeshare obligation.
Lois Center-Shabazz | Course Delta Agency
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Reverse Mortgage Pitfalls Require Senior Homework
Understand the reverse mortgage pitfalls so you know the limitations for your heirs and yourself as homeowner:
I have spoken to a few senior citizens who obtained Reverse Mortgages, but felt nothing but regrets afterwards. Perhaps they did not read the fine print in a brochure that is required by FHA to read before they purchase the loan. After getting constant complaints about Reverse Mortgages, the government has changed the program, but there are still many dangers you need to be aware of.
This article will cover the following pitfalls of reverse mortgages:
What is a reverse mortgage?
How does a reverse mortgage differ from a traditional home loan?
The limitations of a reverse mortgage
Homeowners insurance and taxes
When a reverse mortgage must be paid or you are forclosed
Problems heirs have associated with reverse mortgages
Can heirs take over the reverse mortgage or does it have to be paid off?
When are reverse mortgage repaid?
What is a reverse mortgage?
A Reverse Mortgage is a type of loan open to seniors that are at least 62 years who have a home that is paid off or has a low balance, and they live in the house, and follow the terms of the loan.
The problem that many seniors seem to complain about is that they did not understand the very strict terms of the loan before they signed on the dotted line. Some told me the terms were so strict, it made their lives unbearable trying to live under the guidelines and stay in their home.
How does a reverse mortgage differ from a traditional home loan?
The Reverse Mortgage is different than regular home loans in that it pays you from your loan proceeds, and is available regardless of your current income. The up front fees and cost of the loan, usually taken from loan proceeds are very high–much higher than a regular home loan. You are not required to make payments on the loan while all signers on the loan are alive and live in the home. When the last signer of the loan dies or is out of the home for one year, the loan has to be paid off. A amount of time given to pay off the loan is short, so heirs must act quickly.
The limitations of a reverse mortgage
The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home, sales price or FHA’s mortgage limits, whichever is less. Generally, the more valuable your home is, the older you are, the lower the interest, the more you may borrow.
Bare in mind that borrowing costs are far greater than a conventional second mortgage, and once you get a reverse mortgage, you can’t get another loan on your home.
Homeowners Insurance and Taxes Must be Paid While You Are in The Home
With a Reverse Mortgage, you don’t pay monthly principal and interest payments and the lender pays you according to the payment plan you select. The payments will accumulate and add a balance to your home as a reverse mortgage loan that will be responsible for your heirs if they wish to keep the home.
Like all homeowners, you are still required to pay your real estate taxes, insurance and other conventional payments like utilities. If you get behind in real estate taxes or other required payments, you could be forced out of your home by foreclosure.
With an FHA Reverse Mortgage you cannot be foreclosed or forced to vacate your house because you “missed your mortgage payment.” But, you could be forced out for many other reasons, some of them subjective like allowing the home to fall into unacceptable disrepair. Your local property tax holder can foreclose if your property taxes are not paid, so can the reverse mortgage company.
A Reverse Mortgage must be repaid in full if you meet the following criteria:
1. When you die or sell the home.
2. When you do not pay property taxes or hazard insurance or violate other obligations.
3. You permanently move to a new principal residence.
4. You, or the last borrower, fail to live in the home for 12 months in a row.
5. An example of this situation would be if you (or the last borrower) were to have a 12-month or longer stay in a nursing home.
6. You allow the property to deteriorate and do not make necessary repairs.
A subjective evaluation listed above is, “violating other obligations” that are normally listed in fine print. It is important to read all the information you can get from a non-sales person before considering this loan. Another subjective evaluation is if you “allow the property to deteriorate and do not make necessary repairs”. This gives way too much power to the lender to take your home if they feel repairs are not
adequate.
You can receive the money in a few different ways: In payments, in lump sum, or the combination of payments and lump sum. It’s better to receive the money in payments to guard against premature spending.
Typical Senior Complaints of Reverse Mortgage Borrowers
Complaints I heard from seniors I consulted with were 1. They felt uneasy with the amount of monitoring. 2. If the money is taken in lump sum, there was a tendency to spend it quickly on unnecessary things. Remember, once the loan is taken, there can’t be another loan taken on the house. 3. Seniors have complained that after taking out a Reverse Mortgage the loan officer strong arms them into taking out expensive insurance they don’t need and can’t afford, such as Long Term Care Insurance.
After doing your research and reading all of the fine print about this loan, call a HUD counselor to be sure you get all of the facts before you decide this loan is for you.
An alternative to a Reverse Mortgage is to sell your house outright, place the money in the bank, and have the bank send you a monthly check to live off, in an inexpensive senior apartment. Another option is a traditional second mortgage IF, you can get a low interest loan AND easily afford the payments, and can keep up the payments if you are sick or incapacited. You should have a responsible person to help you.
Complaints Heirs Have of Reverse Mortgages
The complaint some heirs have, is they were not successful in getting the remaining equity out of the home when their elderly relative dies. Currently, some heirs have told me, 1. They did not know their parents had a reverse mortgage and therefore did not act quickly to get a mortgage to replace the loan or sell the home. 2. another common complaint heirs have told me is they weren’t given enough time to get a new loan to pay off the reverse mortgage or sell the home and were therefore foreclosed on.
3. One women I talked to who actually worked at a Reverse Mortgage Company says that a common problem was that no one in the family could qualify for a loan to pay off the reverse mortgage before their time expired – the reverse mortgage company only gives them a set number of months.
Some stay in the homes for a few years, but with some it is only six months – it depends on many factors. At least one heir is supposed to take classes with the homeowner so they can get all the facts or the mortgage broker is supposed to give them all of the necessary information. This does not always happen.
Can heirs take over the reverse mortgage or does it have to be paid off?
When a homeowner over 62 takes out a reverse mortgage the mortgage payments or principle and interest add up in an account overtime. It does not have to be paid back as long as the person or persons who took out the mortgage are still alive and living in the home. The younger a person is when they take out a reverse mortgage, the higher the balance will be when they pass away if they live long.
Consumer Finance on Reverse Mortgages
But, what happens to that balance that has accumulated in an account over time? Can the heirs inherit the balance and keep living in the home rent free as the balance continues to accumulate. No! The heirs are required to make contact with the company on a regular basis and let them know that they are working hard to get a new loan to pay off the reverse mortgage balance left by their parents or they are working hard to sell the home.
If there is a balance left after the home is sold and the reverse mortgage is paid off, the heirs will get the balance. If the reverse mortgage is large or has built up for a long time, even if it was small, the balance could be large and leave nothing to the heirs.
Avoiding Reverse Mortgage Pitfalls Work Best When:
The homeowner has read the FHA bulletin on reverse mortgages and taken the reverse mortgages class to understand the loan.
The homeowner has a responsible child with excellent credit who can qualify for a new loan or sell the home as soon as the last homeowner on the loan passes.
Sometimes it is best to take the money in payments, but if there are no responsible heirs it may be best to take all the equity, put it away, live off a small draw from the bank and leave the rest to heirs.
The responsible heir must communicate with the lender and stay in contact after the last homeowner dies to understand how reverse mortgages are repaid.
The homeowner ALWAYS pays required taxes and insurance while in the home. Also, the homeowner must maintain the home.
Because the interest and principle accumulates while the homeowner is alive there is always a possibility that all of the equity may be exhausted and the heirs could get nothing, especially if the homeowner takes the loan early, for example at 62 and dies at 92.
Big Thing Budgeting in 7 Ways
How to Budget for the big things, use what I call Big Thing Budgeting.
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USE BIG THING BUDGETING TO GET OUT OF A MOUNTAIN DEBT: CREDIT CARDS, MEDICAL BILLS, PREDATORY LENDING
For Individuals, Couples and Small Businesses, you can get out of a mountain of debt if you focus like a laser beam on getting debt-free. It is not easy, but it is possible.
It will first require that you stop buying anything you don’t need. Get rid of the “I Got to Have it Syndrome”.
Start by keeping a log and inventory of your buying habits. Then slowly start to purge spending you don’t need to do. When you take an inventory of your buying habits, you will be surprised at the amount of unnecessary buying you do.
Second, you must start paying off one thing at a time in a big way but pay on other bills at the same time. Start with the smaller bills, pay extra to those bills with the most you can afford, then pay a small amount extra to principle to your other bills — at the same time.
Big Thing Budgeting Shaves Thousands Off Your Budget -Lois
You will see bills drop off one by one. Now, for the larger bills, you may have to start selling things you don’t need. From cars to yard sells, is where you can sell things you don’t need.
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BUDGET TO BUY A CAR
Save money for your next car while your current car is in good shape. Then, research the cost of the car you are interested in. Set a budget, then go through the internet and your local newspaper to see prices and figure out monthly payments, if you plan to finance. If you don’t plan to finance, you will see how much you need to save and for how long, to pay cash.
Consider buying a certified used car at a new car dealer or a one-year-old car from a new car rental agency. Make sure you know the new car prices and options on a new car so you can compare it to a new-used car with options.
Use Kelly blue book or kbb.com, to check for cars that are good for buying as used cars. You can also check for general pricing of new and used cars.
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BUDGET TO BUY A HOME
Home buying requires doing a lot of research to discover 1. how much you can afford to pay for a home, 2. how to find a good mortgage company, bank, or credit union. The best place to start is your local credit union or bank due to the savings in fees, cost and time. 3. How to buy a quality home, and 4. How to get it properly inspected – some inspectors work for the realtors, so many won’t tell you when you the home you are interested in has major problems.
Therefore, it is best to contact tradesmen directly, like electricians, plumbers, roofers, and carpenters to get a fair assessment of possible home repairs. Most of them will do an inspection in their specific area for a small fee.
Use at least 2 of each kind, so you can get a consensus as to what is wrong. You can then budget for the down payment and escrow cost to purchase your next home.
Therefore, it is best to contact tradesmen directly, like electricians, plumbers, roofers, and carpenters to get a fair assessment of possible home repairs.
There is a Right Way and a Wrong Way to Buy Cars, Homes, and Education -Lois
Most of them will do an inspection in their specific area for a small fee. Use at least 2 of each kind, so you can get a consensus as to what is wrong. You can then budget for the down payment and escrow cost to purchase your next home.
Make sure you know exactly what your payment will be in regards to your loan. What will your payment be with Principle+Interest+Insurance+Taxes? You can also do mockups of an imaginary home to calculate what you should pay.
Ask friends or family what they pay for insurance and taxes for a home you are interested in. Taxes vary from state to state, you can also search your state websites. In some states, taxes go up as home values increase, but in others, the taxes stay the same.
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BUDGET FOR VACATION
Don’t put your vacation on a credit card when you can save a little all year and pay cash for your vacation. It is as simple as that. Budget in transportation, food, lodging, tours, and shopping.
If you want to go on the cheap, vacation where you have family members or friends who live in or nearby vacation spot. Pay your family member to stay with them, or cover their restaurant costs and meals. Do the math, and see what works out.
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BUDGET FOR COLLEGE
Some people are obsessed with the “best college syndrome” due to the college propaganda machine.
If you have unlimited money, you can go where you want. But, if you must depend on financial aid, which usually includes substantial student loans, that is not an option. If there is one thing you want to keep as low as possible, is student loans.
Since there is 1. never a guarantee you will get a job in your field or keep it, 2. There is not a guarantee you will get a job that pays in accordance with your student loan 3. you can’t file bankruptcy on student loans.
Because of these items 1-3, you should keep student loans as low as humanly possible. That means avoiding high priced schools and high-priced areas to live in for college. The least expensive schools are community colleges, and state colleges and universities.
There are some colleges that are priced like state colleges and universities, but you must do your homework and compare all cost. Private colleges and universities are unreasonably high cost and they have a lot of hidden costs, which makes the total difficult to calculate.
The for-profit schools offer quick learning and high prices. Today, some of them are now calling themselves non-profit due to the unpopularity of the for-profit model.
Private colleges and universities are unreasonably high cost and they have a lot of hidden costs, which makes the total difficult to calculate. The for-profit schools offer quick learning and high prices. Today, some of them are now calling themselves non-profit due to the unpopularity of the for-profit model.
The for-profit schools do massive advertising on television and the internet, this is your main clue. All colleges and universities have their cost listed on their websites. Make sure you find these costs and know exactly what you are getting into before you consider any college.
Your total student loan balance should not surpass your first years’ salary. Example: If you plan to be a teacher and your first year’s income is $25,000, your student loan should be capped at $20,000. Understand the details of student loans with the eBook on student loans.
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BUDGET TO PAY OFF STUDENT LOANS
There ae people all over Pinterest bragging that they paid off $60,000 of student loans in 5 years. This is possible due to re-amortization. When a loan is amortized to 20 years by your loan servicer, you can amortize it to 10 years by paying extra to principle every month.
If you have a 10-year loan, you can knock it down to 5 years. You can live tight, give up the finer things in life, and knock down those years with extra payment to principle.
You have to check your statements to make sure the extra payment is added to principle and you have to state that on your check, they will always try to put the extra to interest, even though it makes no sense. Big Thing Budgeting is essential when it comes to student loans, if not done correctly, these loans can follow you to your grave.
You have to check your statements to make sure the extra payment is added to principle and you have to state that on your check, they will always try to put the extra to interest, even though it makes no sense. Big Thing Budgeting is essential when it comes to student loans, if not done correctly, these loans can follow you to your grave. Learn more on my instagram.
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PREDATORY LENDING
Understand the way predatory lending works such as car title loans and payday loans. Why are many cars confiscated with a car title loan? Why do payday loan balances go from $500 To $3500?
I would have to write another article for an explanation, but a car title loan can easily double or triple if the money isn’t paid on the date due repeatedly, and a payday loan gets a rollover when the employee does not have the money to repay the loan on time.
Both problems push the balance way up over the top. The most effective way to pay off these loans is to stay away from predatory loans. Using predatory lending is probably the direct opposite of using Big Thing Budgeting, don’t get caught in the predatory lending trap. Predatory lending also includes car title loans, unsubsidized student loans and high interest car loans.
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Lois Center-Shabazz | Course Delta Agency
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Owner-Occupied Real Estate Now and in The Future as A Personal Investment
Owner occupied real estate now and in the future
Your owner-occupied real estate now and in the future, is one of the best long-term investments one can make. Time has shown that owner-occupied real estate can produce tremendous long-term returns. In a few areas of the country the tremendous returns have even been short-term. In some cases, homeowners have sold homes held 30 or 40 years, for 30 to 40 times their original cost.
The least expensive for maintenance cost is the owner-occupied real estate investment, simply because most owners correct problems as they arise.
The hardest part of real estate investing is to know when prices are inflated or low. To understand this, you must do a lot of research or endure a lot of pain until prices stabilize. Residential real estate as an investment requires, skill, intelligence, research, intuition, a lot of time, very hard work, and luck.
Here are items to look for before and during your owner-occupied real estate now and in the future home search, for a successful property.
Good Credit Score
Before you start to look for a home the first steps are to;
Get a copy of your credit report
Go over it closely, make sure all the credit listed belongs to you
If you Find credit that does not belong to you, write Experian.com and challenge the reporting with them.
Stop charging, and start paying off credit you already have
Pay off anything that is past due, and maintain your bills monthly
Quality loan
Do not get a loan until your credit is cleaned up to the best of your ability, this may take months to a few years. Save for a down payment or get a no down payment loan and pay more points (or higher interest rate). Research any mortgage company you plan to use and make sure they are legitimate.
If you are a first-time home buyer consider FHA loans, or NACA (naca.com) to help with the qualifying process. Every city has a first time home buyers organization in town to help with the buying process.
Quality home – Well inspected
Make sure you are getting a quality home, by getting quality inspections from plumbers, electricians, HVAC, and carpenters. There are many home buying nightmares where buyers used a lone home inspector who missed most if not all the problems. If you find problems in an inspection, you will know what you are up against. You can either: 1. Find another home, or 2. Ask for a reduction in price so the problem can be fixed in your increased loan amount.
Home purchased at the bottom or middle of a market
Know if your home buying market is in a bubble or if your home is over-priced. If it is you may not be able to sell the home for several years, even if you must move.
Affordable price
An affordable price is a home that fits your budget and is generally around 30% of your gross. Create a sustainable “overall budget” before you buy.
Well maintained
Look for signs the home has been well-maintained. Inspect the heating and air conditioning units well, the roof should stand the test of a heavy water hose. The floor should be level when you place a marble on the floor it should not roll, if it rolls, you may have a serious foundation problem.
Value increases over time: The more jobs or tourism there is in the area, the more valuable the area may be in terms of increase in home value over time. Then an area with no jobs or tourism can transform in several years when something valuable is added. As well as places that go under due to a decline in an area that has no jobs or amenities. It is best to look at an area with amenities at the time of sell.
No monthly house payment or rent
After the mortgage is paid off, you will have no house note or rent to pay. This is a tremendous savings. But, you will still have maintenance and taxes. It is important to factor in taxes as you age. Will your retirement check be enough for taxes and home maintenance?
The advantages and disadvantages of owner-occupied real estate is listed below:
Key advantages of owner-occupied real estate are:
• You can qualify for the lowest interest real estate loans available
• You can qualify for low down payment consideration, of 5%-10%. There are also extra low-down payment loans for first time buyers who qualify, as low as 3% down.
• You qualify for a full array of owner-occupied tax deductions. IRS Homebuyers Credit
• Most owner-occupied homeowners take pride and joy in maintaining their own home, so the long-term maintenance is usually reasonable.
• Owner-occupied real-estate profits have been tremendous when held long-term.
• There is a capital gain exclusion for taxes up to $250,000 if you have lived in the house for 2 of 5 years.
Key disadvantages of owner-occupied real estate:
• The debt carried when a home is leveraged with a mortgage loan.
• The responsibility of up-keep, for some this is an advantage, since they enjoy the up-keep.
• You are responsible for taxes.
Your owner-occupied real estate now and in the future, has many more advantages than disadvantages.
Lois Center-Shabazz | Course Delta Agency
Author, Blogger, Course Creator, Investor, & Money Strategist
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A Word About Home Loans
It is best to build equity in your home over a number of years. Your goal should be to pay your home off in 15 or 30 years or earlier, if possible. Then sell it, and live off the proceeds as part of your retirement, or leave money to your heirs to purchase their own home.
Should you decide to acquire a new home loan your income should easily support the new payment. If you do not have an income or your income is limited, you should not acquire a new loan. A loan has to easily supported by your income NOT your equity. The income you have is what you will use to pay your monthly mortgage with
Take the home buying course to get the best possible home
If you do acquire a new home loan you should:
- Have income to easily support your home loan.
This sounds like a simple concept. But, for many who want a home they think, “buy the home first, then figure out how to pay for it”. Please don’t put the “cart before the horse”, so to speak. You make yourself susceptible to bad loans and bad lenders when you buy a home before you have done your research and determined that you can afford a quality loan. The keyword being quality. The high quality loan, the more qualified you are the more likely you are to stay in your home long term, build equity, and retire without a payment, because it will be paid off by you.
- Have researched an affordable, high-quality loan yourself or have a relative research one for you. Compare several home loans, read the fine print, ask plenty of questions, understand all of the terms of the loans. See home buying at Msfinancialsavvy’s home buying course where you will learn over 100 ways to successfully buy a home. It is targeted to women, buy of course men will benefit too. Home buying is tricky, so I recommend you take this very inexpensive home buying course well in advance of buying a home.
- Make sure the appraised value of other homes in your neighborhood substantiates the added cost of a new or additional home loan. Understand and verify in writing you have a high-quality loan with no balloon payment attached. Some home buying purchase a home based on emotions and not all of the facts they need to make sure they are not cheated. You can easily overpay for a home when you buy on emotions. This can happen if the sellers lie about amenities or if the neighborhood is going down in value, so for instance you check the last four home sales in the area, but home values are trending down, so you get a home that you could have negotiated way down if you had this information.
- Understand in writing, the actual interest rate of your loan, obtain an interest rate you can afford or do not obtain the loan. Sometimes interest rates change before signing for your new loan.
- Understand it does not make good financial sense to replace a loan that is nearly paid off with a long-term loan of 15 or 30 years. Once you have your home paid off you are home free. No more payments, you can call it rent/mortgage free, so DON’T mess it up at this time. Especially if your income is not set after retirement, you don’t want to increase your liabilities with a new loan if you are not increasing your income.
- Visit, www.fdic.gov (see “looking for a mortgage”)
There has been a lot of information in the media lately about predatory lenders, they prey on the poor, under-educated homeowners with lots of equity in their homes. If you know of anyone in this category educate them about the dangers of unsolicited home loans or home loans with potential balloon payments.
Remember; do not forget to read the fine print. Also, if you don’t have a job, don’t get another loan. If you need a business loan, don’t use your house; get a bank business loan or Small Business Administration loan, see www.sba.gov. Another option is to delay starting a business until you can acquire proper funding.
Get a Quality Home or Mortgage With Big Thing Buying Skills
Home or Mortgage; Buying an Affordable Low Maintenance Home and Get a Quality Mortgage
YOUR BUDGET
The first thing you have to ask is, “How much house can we afford” The payments include P+I+T+I (principle+interest+taxes+insurance). Most of your payment will be principle and interest, taxes vary according to state, and insurance is not a very big cost.
But, you can figure it out with most online calculators. You have to know how to calculate P+I+T+I to get a quality home or mortgage.
You should be stable in your job or with your business before you decide to take the leap to sign on with a mortgage.
Most banks want you to be on your job or in your business for a solid two years. Set up a file system for steps 1-8, don’t rush and do your research.
Step 1
MORTGAGE COST
Below is a typical cost analysis of a home or mortgage with average tax state, always find out how much typical insurance and taxes are in your state before you decide your budget.
Choose a home price you think you can qualify for based on total payment. You will keep adjusting home price until you can find one that is close to your budget. Use my mortgage amortization calculator at LiveRichCalculators.
Say your home or mortgage costs are as follow:
$300,000 price of home
at, 4% interest
30 year
Taxes=6000/yr
Insurance=500/yr
Monthly Payment and Interest=1,432.5
Monthly Taxes and Insurance=541.67
Total Payment=$1,973.92
Step 2
DOWN PAYMENT AND ESCROW COST
Find out what a typical down payment is at your credit union, bank, or mortgage company. Now, make sure you have the savings or start a savings account with the down payment and escrow cost.
If you find a buyer who is anxious to sell and they have a lot of equity in their home sometimes you can negotiate that they pay your buyer’s escrow cost.
For the example above the downpayment is:
5%=$15,000
A 1% escrow cost = $3000
Step 3
MAINTENANCE COST
Allow a monthly saving account for maintenance cost, most homes have maintenance repairs from time to time.
Old homes usually have a higher maintenance cost than newer homes, unless all electrical, plumbing and other major items replaced. The important aspect of a good home is a good inspection, preferably by tradesmen.
I prefer hiring an actual plumber, electrician, and carpenter to inspect your new home instead of one single home inspector. Some of those home inspectors only take a 6 month home inspection course.
The tradesmen work in the field every day for years. You should also do your own inspection with a moisture meter and electrical meter to see if there are any glaring defects.
If you place a marble on the floor does it roll or stay put, if it rolls you could have a damaged foundation. That is extremely expensive to repair. If you know the repairs you may be able to add those into your mortgage and fix after your move in.
Step 4
CREDIT REPORT
Get a copy of your credit report before you start to look for a home. Read it carefully. Some people are shocked at the mistakes that get on their credit report. Make sure you document the mistakes on your credit report and challenge them with Experian credit bureau.
Experian will usually send the corrections to the other bureaus. When all corrections are in place, get another copy of your credit report, and credit score. Getting an affordable, quality home or mortgage starts with a good credit report and high credit score.
Step 5
PAY OFF BILLS
You know what your bills are, and you know if they are excessive. You will need to find room in your budget for a mortgage. You don’t want a mortgage that increases your current bills per month too much.
Like you don’t want to get from $500 per month of rent to $1900 per month for a mortgage unless you have been saving at least $2500 per month so that savings will go into your mortgage.
You should also still have room for a savings account or two after you get a mortgage. You will need savings for home maintenance, car maintenance, and general emergencies. Pay off as many bills as possible before you start a mortgage.
Step 6
SAVE FOR A DOWN PAYMENT AND CLOSING COST
Down payments are ranging anywhere from 5% to 10% down. The more you put down, of course, the lower your monthly payment will be. Then, there are buyers closing cost you must pay also. This is usually a surprise to new home buyers.
Closing cost is typically 2 to 5 percent of the purchase price. So, for a $300,000 home, the closing cost would be about $9,000.
Step 7
MORTGAGE RESEARCH
Before you decide to use a financial institute, do your research. If you have a credit union or local bank you do business with and you have good credit, it is usually relatively easy to get a loan at one of those places and you will save on additional cost that is charged by mortgage companies.
If you can’t get financing from your credit union or bank, research the best mortgage companies in your area. You can also ask friends and family who they had good luck with.
Before your visit anyone for a mortgage. Research mortgages, make absolutely sure you understand what a quality mortgage is. Know what the current rates are for a 15 year or 30-year mortgage.
Don’t allow anyone to give you a low-quality mortgage, if they think you have not done your research, some will try to give you a low-quality mortgage, even if you qualify for a high-quality mortgage.
If you qualify for a low-interest high quality conventional low-interest rate 30-year mortgage, make sure you get one. The industry is full of nice, dishonest people, protect yourself.
Step 8
MORTGAGE RATES AND QUALITY
Call your local credit union or bank to get current rates on quality mortgages.
Use my mortgage calculators at LiveRichCalculators.
Use the department of housing website to read about various types of Mortgage Issues.
This is most of the information you need to purchase a quality home or mortgage if it is your first home or your second or third.
Get all the facts to buy a quality affordable home with low maintenance.
Lois Center-Shabazz | Course Delta Agency
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Summary
Remember that buying a home is a serious process. You should take your time and be very methodical.
Some places have home prices that are outrageous – in that case, you may have to drive a long distance to get to work, by living in an affordable area further from your center of town.
Some towns have affordable housing compared to income. Take your time it may take anywhere from 6 months to 5 years to go through the process I list above. Article Updated 2019
How To Buy a Home So It Last For Decades
GET A GOOD HOME LOAN TO BUY A HOME
Affordable Payment (P+I+T+I = principle,interest,taxes,insurance)
Your payment should be within the limits of your income to buy a home. If it is at all possible, base the payment on one income. It’s best to keep it at about 30% of income, before taxes, but you can go higher as you decrease other bills such as no car note, purchasing a home with low utilities, having a short commute and low gas usage, carefully budgeting groceries. The 30% is about what lenders look at also to buy a home.
Research articles about predatory lending and avoid it, if at all possible. It is called predatory because the requirements to qualify are low and the risks are high.
COST OF A LOAN TO BUY A HOME
Many people don’t know that loans cost money. This is covered in the escrow and closing cost fees and is extra from the down payment. There are 50 states and several cities within each state. Every state and the city within the states have their own closing cost schedule. Here is an example showing one city, within one state. The city is Los Angeles and the state is California, on a $200,000 loan.
LOS ANGELES CLOSING COST–LOAN AMOUNT $200,000, TO BUY A HOME
Origination fees charged by lenders $1,030
Third-party fees $1,196
Taxes $0
Total $2,225
Loan amount $200,000
ITEMIZED ORIGINATION FEES CHARGED BY THE LENDER
Origination points $586
Commitment fee $370
Document preparation $58
Broker, originator or lender $920
Processing $1,195
Tax service $76
Underwriting N/A
ITEMIZED THIRD PARTY FEES
Appraisal $461
Attorney, closing or settlement $639
Credit report $25
Flood certification $11
Postage/courier $100
Survey $500
Taxes
Borrower’s share of state and local transfer taxes and fees $0
Mortgage tax $0
If you have sellers that are badly in need of a sell, sometimes they will agree to pay your sellers cost. Sometimes you can bundle the sellers cost in your loan.
THE AVERAGE COST OF HOMES
Some places in the country average home prices are $50,000 and Some $1 million. It depends on where you live. In places where there are several high-income jobs and a shortage of home inventory such as San Jose, California the cost of the average home is almost $1 million dollars. In contrast, the cost of the average home in Houston, Texas is less than $200,000.
WHAT TO LOOK FOR WHEN YOU SHOP FOR A HOME
INSPECTION
Many general inspectors do quick inspections and leave major work for you to discover after you buy. You can get inspections from actual tradespeople for a reasonable fee. The trades would include electricians, plumbers, air conditioning, roofing, and carpenters. They would be more likely to find major problems than a general inspector.
When you do find, problems wrong you have two options 1. Ask the sellers to fix them, or 2. Ask them to lower the price so you can fix them with extra money from the loan.
MAINTENANCE
This is difficult, but try to get copies of the electrical, gas, water, and other utility costs. Some homes have high utility cost and some have low cost. The larger the home, the more the utility maintenance cost are. Some high maintenance comes with old or malfunctioning equipment.
DISCLOSURE FROM SELLERS
Some states have strict disclosure laws and others don’t. Request that your seller discloses all potential problems with the home, neighbors, or the neighborhood.
CONTINGENCY CLAUSES
Make your home sell contingent on everything you ask for, otherwise, the deal is off. This will motivate the sellers, real estate agent, and lender to be honest and do everything in a timely manner. It also gives you an out if something is found to be wrong during the process and you can get your deposit back.
TAXES
Get a copy of the taxes paid for the year. Also, the real estate agent or lender can usually tell you what the home taxes are for your home.
ESCROW ACCOUNT TAXES AND INSURANCE
If you don’t want to have to pay a tax bill bi-yearly or worse yet yearly, you can request an escrow account, where you pay your taxes and insurance monthly with your payment. This is much easier than the lump sum, for most homeowners.
DOWN PAYMENT
Your down payment is in addition to your escrow and closing cost. Most lenders want a down payment of 10% to get a good interest rate to buy a home. There are some no-down loans, but generally, your interest rate and payment are more. I prefer the down payment loan, and lower interest rate – it is less risky for the homeowner.
MOST REQUESTED INFORMATION
You will be asked for proof you can purchase a home or secure a loan. You will be asked for 1. proof of income from a job or business, 2. proof of income from income taxes provided by you and the Internal Revenue Service, 3. credit reports that show credit score and credit history. 4. proof of source of downpayment 5. proof of rent history or payment history of current loan.
LOAN BALANCE LIMITS COMMUNITY AND JOBS, TO BUY A HOME
Start with and affordable home. Don’t let a real estate agent or a lender talk you into getting more home than you know you can afford. Sometimes they don’t consider your existing bills or obligations you know you will have in the future, like the need for a better car or a kid going to college.
Look for a good neighborhood. There is no such thing as perfect people or a perfect neighborhood. But, you can search schools, crime and jobs nearby. The searches are not always accurate, but they will give you an idea.
Lois Center-Shabazz | Course Delta Agency
Personal Finance: Author, Blogger, Course Creator, Money Strategist
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How Does Refinancing Work? Your Home Refinance
How does refinancing work, when it comes to refinancing your home?
Should be the first question you and your spouse ask yourselves before you decide to refinance your existing home loan. Recent reports show that some homeowners are borrowing to the constant enticement of lower home loan rates. Considering the continuing low-interest rates on home loans, is it time for you to consider purchasing a home?— Or refinancing your existing home? Some homeowners are said to be refinancing their existing loan over and over.
If you are in the market for a new home, then this is one of the best times to purchase a primary mortgage. But as far as refinancing, in my opinion, I don’t feel that many of the constantly refinancing homeowners understand all of the facts (and high cost) surrounding home refinancing. A one-time refinance is appropriate if you have done your homework and know that a refinanced loan will be a benefit to you.
If you are in the market for a new home, then this is one of the best times to purchase a primary mortgage. But as far as refinancing, in my opinion, I don’t feel that many of the constantly refinancing homeowners understand all of the facts (and high cost) surrounding home refinancing. A one-time refinance is appropriate if you have done your homework and know that a refinanced loan will be a benefit to you.
If you do not answer the question, How does refinancing work? before deciding to refinance, you could get yourself and your home loan security at risk.
Refinancing an Existing 30-year Loan
1. Each time you refinance to a new 30-year loan, you can go over your 30 year period to 40 years, 50 years and sometimes 60. If a homeowner does this every 5 years for 20 years, then at the end of 20 years you will have 30 years left to pay on your mortgage instead of 10 years had if you not refinanced your original loan. The extra years of interest and principle will substantially increase the amount of money you pay on your mortgage and hence increase the actual cost of your home.
The Solution: Calculate how many years you have already paid on your home loan. If you have paid on your loan for 15 years, then try for a 10 or 15-year loan if the interest rate is low enough. Another solution is to get a loan with no pre-payment penalties and pay extra to principle each month to make sure you don’t go over the 30-year mark, or better yet shave your payment years down to 10 or 15 years.
You can do this by figuring out how much you can shave off your total loan by figuring out how much you will decrease your principal amount each year.
Example of a Great Home Loan Refinance
In 2006 mortgage rates were about 6.25, in 2016 mortgage rates were about 3.75-4.00%. Say you paid down your mortgage and only have 17 years left. If you refinance from 6.25% to 4% for 15 years. You will save 2 years off your mortgage, and about 2% off your interest rate. The monthly savings and the overall savings on your total mortgage will be substantial.
This is a refinance that is worth it. The savings could be as much as $1000 a month on a $400,000 house. In contrast, if you add years and the interest rate decrease is small you could actually increase your mortgage balance over years.
The Purpose: The issue becomes, “Why are you getting the refinanced mortgage in the first place?” Are you desperate for money to use for medical purposes, college, or some other dire emergency? Or, are you looking to save money on your overall cost and either put the extra savings into a general savings account, retirement, retire earlier with no mortgage, pay down other bills, or lower your existing payments due to financial stress?
This is a question you must answer and make your intentions crystal clear to yourself and your spouse before you decide to refinance.
How Much Will it Cost to Refinance Your Home Loan?
2. It will cost you a hefty sum of money each time you refinance your existing home loan or purchase one for a new home. And even the so-called no-cost loans will cost you. The purchase price of a new loan is either 2%-4% of the new loan or in the case of the no-cost loans; the fees are added into your loan as a higher interest rate.
You will, therefore, pay for the cost included in your monthly payments. It can take as long as four to six years to pay off the cost of your home refinance, so plan to stay put for awhile if you choose to refinance.
Home Loan Resources For Primary and Refinance Loans
3. There are several resources to help you make a wise decision when it comes to choosing a loan for a new home, and understanding how detrimental constantly refinancing your existing home can actually be. Refinancing your home should be a rare consideration and carefully calculated decision before you visit a mortgage company.
Credit unions and your local banks offer the best solutions if you don’t have optimal credit and money saved in a bank or credit union then carefully select a mortgage company.
The U.S. Department of Housing and Urban Development offers numerous resources on its Web site, www.hud.gov, for homebuyers. It publishes an eight-page booklet, “Looking For the Best Mortgage,” which offers advice on finding the best deal. General tips include:
1. Contact several mortgage lenders and brokers for information.
2. Check hsh.com to see what the average mortgage rates are now.
2. If you have a good relationship with your local bank, start with them. Especially if you have a substantial saving or checking account with them. The mortgage division is usually a separate business in your bank, but a relationship with the bank will make getting a mortgage easier.
2. Obtain all cost information, including interest rates, points, fees, down payment requirements and private mortgage insurance.
3. Negotiate. Mortgage deals vary from day-to-day. Once you find a deal you like, lock it in.
4. Federal law prohibits discrimination in mortgage lending.
5. Understand your credit. If it’s not good, finding a loan could be difficult. To obtain a copy of your credit report, contact www.experian.com. You should know your credit score and examine your credit report before you shop for a refinance. Sometimes credit reports have mistakes and can be taken off by contacting the credit reporting agency before you shop for a loan.
The primary goal for you is to make sure you answer the question thoroughly, How does refinancing work? Before you consider a new loan.
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