Wednesday, April 29, 2015

Start Building Home Equity Now


Written by  on Thursday, 13 November 2014 11:46 am
There are two ways to build equity, or ownership, in your home. One is to pay what you owe your lender which reduces the principle owed on your mortgage, and the other is to take advantage of market upswings which increase the value of your home.
One way to build equity is to put more money down on the home you want to buy. Lenders have returned to tried and true models of income-to-debt ratios, requiring that borrowers put more money down when they purchase a home. While it's still possible to get zero-down loans, such as those offered by the VA, most loans with low down payments require mortgage insurance.
For a conventional loan, one eligible for purchase on the secondary market by Fannie Mae or Freddie Mac, requirements are stricter, but there is also more leeway on eligibility. The minimum down payment required is as little as 3% to 5%, under special circumstances, including excellent credit and the willingness to pay private mortgage insurance. But to make sure the loan goes through, most borrowers are putting down as much as 20%.
The more you put down, the more equity you will instantly have. This is important because you need equity in order to sell your home one day so you don't need to come up with additional cash at settlement.
As you make your house payments, you build equity slowly. The longer you own your home, the less you'll pay in interest and a greater share will go toward ownership, or building equity.
For example, if you borrow $250,000 at 5%, your monthly payment is $1,342.05. Over 30 years, you'll pay an additional $233,139 in interest for a total of $483,139.
The first month of paying your mortgage, you'll pay $1041.67 in interest, and only $300.39 toward reducing your principal. At that rate, building equity may seem like it will take forever. But only two years later, your interest payment lowers to $1011.52 and $330.53 goes toward reducing what you owe your lender.
In five years, $383.91 goes toward reducing principal. To learn more, you can go online and look for mortgage calculators with amortization.
You can build equity faster by adding a little more to your payment, which can remove hundreds of dollars in interest from your payments and allows you to own your home in full much faster. You don't have to refinance to do this -- simply allow more to be deducted from your checking account to be applied to principle, or add an additional payment onto your payment coupon.
The second way to build equity is to allow the market to do it for you. Home values historically beat inflation by one to two percentage points, but the last decade has been anything but typical. However, all markets return to the norm, so assuming a normal market is on the way, your home should appreciate at least one percent annually.
If you purchased your home for $300,000, (hence the $250,000 mortgage), your home's value should grow $3000 in one year. The next year, your $303,000 home is worth $306,030, and so on. This is all providing that your home's condition remains exemplary, the jobs outlook continues to be positive, and other market variables go your way.
But one thing is certain, you can't build equity unless you're invested. If you want to take advantage of the recovering housing market to build equity, it's time to invest in a home.

Tuesday, April 21, 2015

Good Credit is Important, After Your Home Purchase


Written by Jaymi Naciri on Thursday, 19 March 2015 2:00 pm
Everybody knows how important it is to have great credit when you're buying a house. But keeping your credit good after you've purchased is just as critical. Letting your score take a hit after you close escrow can negatively impact you in a few important ways.
Credit Cards
It's easier than you think to get into trouble with credit cards once you become a homeowner. One late or missed payment is all it takes to get your first ding.
Even if you don't have any credit cards when you buy your home, make your first mortgage payment and watch your mailbox fill up with pre-approval offers. While it might be tempting to get all those cards and charge them up with new furniture and window coverings and TVs and appliances, it might be best to wait. As a new homeowner, you don't yet know what your total monthly nut will be.
Maybe the utilities are way more than you expected. Perhaps your air conditioning goes kaput the first time you turn it on in the spring or your handyman discovers asbestos while scraping the cottage cheese ceilings in your living room. What if rising values in your area means higher taxes for the next year? Delaying some or all of those purchases until you know what you can easily afford can help you stay in good financial shape.
If rates drop after you've moved in or you didn't get the greatest rate to begin with, refinancing might be your answer since it can save you money every month and over the life of your loan. If your credit score has gone up since you purchased, which often happens after a mortgage payment or two, you might be in a good position to refinance. If your credit score has dropped since your lender approval because you took out too much credit or were late on any of your payments, you may not qualify, which would mean sticking with your existing rate.
Another good reason to refinance is lower private mortgage insurance (PMI) rates for those with a Federal Housing Administration (FHA) loan. The lower rates are expected to save homeowners up to $900 per year, according to the U.S. Department of Housing and Urban Development.
Cars, cable, and cell phones, oh my!
The bump in your credit score post-mortgage can help you get a better rate when buying a car, whereas a credit score in decline could mean not qualifying at all. But even smaller purchases and necessary services can be affected by poor credit.
"Cell phone companies run a credit check on you every time you sign up for a new contract," said CNN Money. "The rationale is simple: Wireless companies want to make sure you'll pay your bill. The company "has revealed that 50% of its customers don't qualify for its top promotions."
Utilities like electric and gas as well as cable and satellite may not decline to service your home, especially if they are the only provider in your area. But you may have to pay a higher deposit if your credit is bad—something to consider if you are planning to change to a different provider or plan.

Friday, April 17, 2015

What Does it Take to Actually Apply for a Mortgage?

Some friendly advice from one of my local loan officers:If you call him be sure to tell him you found him through me! (Wendy D)

A pre-approval is crucial in the home buying process. Movement Mortgage specializes in old-fashioned service while using the latest technology to ensure a smooth and swift transaction for our clients.
Items Needed for a Pre-Approval
Last two months of bank statements (all pages, all accounts)
Last two months of retirement and 401K statements (all pages, all accounts)
Last 30 days of pay stubs or current LES (military)
Award Letters for Retirement Income, Social Security, Disability Income and SSI (if applicable)
Last 2 years of 1040 Federal Income Tax Returns
Last 2 years of Federal Corporate and/or Partnership Tax Returns (self-employed)
Last 2 years of W-2 Forms
Copy of driver's license and Military ID (military)
Statement of Service from Command — must include eligibility for reenlistment(military)
Mortgage Consultant
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Wednesday, April 8, 2015

The Evolution of the Dining Room

The Evolution of the Dining Room

Some buyers want them, others don’t. But before your clients rush into major structural changes to rid their home of a formal dining space, here are some options that may affordably meet their needs.
Some builders, architects, and real estate pros have said dining rooms are a thing of the past — a relic of older homes, like avocado green kitchens and shag carpeting.
Not so fast! Maybe dining rooms aren’t as passé as thought in recent years.
While eliminating the concept of a room devoted only to traditional dining may appeal to more home owners, many still want to purchase a house with a separate dining space. The reason? It can work in a multitude of ways, depending on a family’s interests. There’s no single solution, says Rick Dent, a senior interior designer with Mathews Furniture Gallery in Atlanta, whose clients ask him to help furnish their dining rooms in a variety of ways.
Help your sellers and buyers understand all the possibilities, along with the risks, if they want to make permanent changes to a home’s layouts.

Think open-style or great room.

New home construction, which often indicates current buying trends, reveals that the living room could either disappear or merge with other rooms, according to a survey from the National Association of Home Builders about the 2015 new home. This is hardly surprising given that informal living and dining continues to gain fans, even among home owners residing in existing traditional houses, condominiums, and townhouses.
Many will take down walls for an interflowing, all-in-one kitchen-dining-living room, says Chicago designer Scott Dresner. Keeping all areas open to one another offers another advantage: The space tends to look larger, says Chicago designer John Wiltgen, who’s found more of his clients, even those with traditional taste, seek this arrangement. One of his urban clients recently turned a 24-by-15-foot dining room into a combined kitchen-family room by removing a wall. “The kitchen was on the interior, so this also brightened the space, and the area became more equivalent to a family room found in a suburban home,” he says.

Know the niche.

The open layout may not appeal to some buyers. Home builder and developer John Egnatis, CEO and cofounder of Grenadier Homes in Dallas, which focuses on the 50-plus market, is finding that the size and price range of houses often determine whether a traditional or more modern layout is preferred. In smaller homes, under $300,000, Egnatis says dining rooms are being combined with breakfast nooks as the main dining space, though a kitchen countertop may include bar seating where people can also dine. However, in more expensive homes that are 2,500 square feet or larger, a separate dining room still is the trend, he says.
As the size and price of the home increase, buyers have to make fewer compromises, Egnatis says. What’s important is that a home owner make their house work for them, not future buyers. Few know when they might move again, who will purchase their home down the road, or what design trends may surface in the meantime.

Transform dining room square footage into…

Some home owners are converting a separate dining room to a more needed use — perhaps a homework center for multiple generations to work in or a super-casual family room with big-screen TV and billiards table. One of Dent’s clients transformed the dining room into a music room for their children who play the piano, drums, and guitar, allowing the family to host recitals. Others are reimaging the dining room as guest quarters for overnight visitors or aging parents, especially if there’s a bathroom nearby.

Go multifunctional.

For those buyers who still favor a traditional dining room for holidays and special events and are reluctant to give up their favorite good china, crystal, and flatware, there’s another alternative, says Wiltgen. A traditional layout with a table anchored by a chandelier overhead and area rug underfoot can work in a corner with some adjustments. Home owners might forgo chairs all around and opt for a banquette to fill the space fully, or do away with the chandelier and go with sconces or floor lights, so it doesn’t look off-center, even though it is. Then, the leftover space can be devoted to other functions, such as a library with floor-to-ceiling bookshelves and seating, which can look smashing as a backdrop during those occasional dinners, Wiltgen says.
Dent has found that with computers and tablets shrinking, smaller desks are the trend. “Many would prefer that the dining room be converted at times rather than totally giving up a bedroom for an office,” he says.
A round rather than rectangular table often functions better in versatile layouts since it’s easier to navigate around and more conducive to a single conversation, Wiltgen says.

Don’t ignore outdoor space.

Depending on the area of the country you work in, the climate might not always cooperate, but a terrace, deck, or balcony can become a favorite al fresco dining spot. Protect it with an awning or umbrella overhead, or home owners can partly enclose their outdoor seating so its use can be extended into nippier fall weather.
Wiltgen and his partner frequently use their terrace for meals, which is the size of some homes and apartments at 1,000 square feet. It also has good city views from its 10th floor perch.
Egnatis’s company now offers a covered front porch at least 6 feet deep and 15 to 20 feet long as a standard feature. The rear of his homes feature a 12-by-13-foot area that can function as a dining space. And both can be a place to relax with fewer digital intrusions than indoors, he says.

The bottom line:

“Retrofitting and making changes is way more expensive — two to three times or more, depending on the changes and particular geographic market — than building from scratch,” Egnatis says.
Advise home owners and potential buyers not to rush to make huge layout changes willy-nilly. Sometimes, it’s best for them to live in a house as it exists, then decide if they should adjust the room layout through remodeling to better meet their needs.

Thursday, April 2, 2015

Transit Oriented Developements (T.O.D.'s)

No Parking, No Problem

Transit-oriented developments are reflecting the preferences of today’s younger professionals. Learn what leading-edge developers are thinking.

Millennials are driving today’s transformation of major urban centers, according to a fall 2014 Cushman & Wakefield report. Many are opting to ditch cars as long as they can live within walking distance of amenity-rich areas and easily catch transit when they’re looking to venture beyond their neighborhood hub. In just six years, C&W reports, they’ll make up more than half of the global workforce. This expanding cohort of workers born since 1982 is likely to turbocharge another phenomenon with important ramifications for commercial practitioners: the demand for so-called transit-oriented development.
These mixed-use areas in cities and suburbs are located a half-mile or less from public transportation and typically occur in higher-density communities. Along with improving access to jobs, such developments spur other benefits, including reductions in driving rates, road congestion, and greenhouse gas emissions. Perhaps the most radical departure of all from conventional development priorities, onsite parking is typically a minimal or nonexistent part of the plan.
However, like the millennials themselves, TODs have matured since they first emerged. In some cases, neighborhood activists are pushing for TODs. And where they’re not on consumers’ radar, developers are fine-tuning their strategies to seek meaningful community involvement. Smart developers understand they need to offer more than just proximity to transit. Their projects need to reflect the changing lifestyles of younger consumers who are more likely to be tethered to their electronic gadgets than to a vehicle—a reality that lenders are starting to grasp as well.
Since the late 1990s, TOD has been a force in the development world, says David Dixon, an urban planner at Stantec in Boston. The Great Recession, however, changed TOD’s trajectory.
“Transit’s ability to really incent development—and a different kind of development, of walkable communities—first became recognized in the late 1990s and early 2000s,” he explains. “But coming out of the recession there’s been so much more awareness of the power of cities to attract people, the interest in walkable environments, and the desire to not have a car. ”
Data has begun emerging showing that TOD improves property values. A 2009 study by CEOs for Cities found that in 13 of the 15 markets analyzed, increased walkability in a neighborhood was directly linked to higher home values.
Fitzhugh Stout, senior managing director of the Charlotte, N.C., office of Integra Realty Resources, a real estate valuation company, studied the effect of a light rail line that opened in his area in 2007. He found properties had increased in value from 5 percent to 73 percent since then, and the most dramatic increases came from changes in zoning that permitted increased density. “Everywhere in the country, people talk about reducing parking and getting higher density in development,” he says. “Transit has allowed that to happen.”
Another factor critical to TOD’s growth is Americans’ ever-increasing focus on health. About 15 years ago, recalls Dixon, Dr. Richard Jackson, then director of the Centers for Disease Control’s National Center for Environmental Health, started talking about a link between auto dependence and obesity. Today people consider a walkable environment a healthier environment. That’s a sea change, says Dixon, from when people saw the lawns of the suburbs and thought they translated to a healthier life.

Community Pushes for TOD

It was local residents who clamored for a high-density development at 1611 W. Division in Chicago. The city passed an ordinance in September 2013 permitting higher density and less parking for developments near transit hubs. The 99-unit apartment building sits atop the city’s Blue Line “el” train stop at Division, an intersection six bus lines traverse daily.
The project’s specs were heavily shaped by a local community group. “It wasn’t the developer saying, ‘We want to build a TOD project,’ ” says Jamie McNally, an architect and project manager for the project’s developer, Rob Buono. “A community group had a master plan before this project was created. [It] wanted moderate to high density [and] low parking, and the idea was to promote pedestrian-friendly, walkable neighborhoods.”
There’s no on-site or even authorized street parking for residents. Leases even prohibit residents from getting street-parking passes from the city. That hasn’t been a deterrent in leasing. Units were fully leased when the property opened in October 2013.
 They range from 507-square-foot studios to 1,146-square-foot two-bedroom two-bath apartments with rents ranging from $1,495 to $3,450 per month. The property includes a free second-floor bike garage and a “train tracker” screen in the lobby so residents can see where transit vehicles are in real time. Across the street is a station for Divvy, the city’s bike--sharing program launched in June 2013.
The property has 5,000 square feet of commercial space and about 7,050 square feet of ground-floor retail space. McNally says despite its growing popularity, TOD doesn’t automatically translate to a higher return for developers. “It depends on the individual project,” says McNally. “There are so many factors in new construction.”  While some lenders have reservations about financing projects without parking, it wasn’t the case with this project, and that’s changing overall. “It’s partly because there’s been a paradigm shift in urban planning and lifestyles. Young professionals don’t necessarily want or need a car and all the expenses that go along with it,” he says.

Hotel? What a Great Idea!

Community input has also been critical to a $100 million TOD in Huntington, N.Y., on Long Island, currently in the permitting and environmental review stage, by Renaissance Downtowns, a developer based in nearby Plainview, N.Y. In the works is a 170-room hotel set to open in spring 2017. It’ll be supplemented with a 100,000-square-foot office building; two mixed-use buildings, one with retail on the ground level plus two stories above it featuring 70 residential units; and a 48-unit artists’ live-work building.
All those buildings will sit within a half-mile of the Huntington Station rail stop, which lands riders in Manhattan in about an hour, taking the place of commuter parking lots that currently exist. “Our whole model is going to municipalities near train stations with a lot of surface parking that’s underutilized and replacing the parking with new buildings that include parking within the structures,” says Sean McLean, the company’s vice president of planning and development.
The project is being financed privately through RXR Realty, says McLean. RXR, which operates in New York, New Jersey, and Connecticut, launched an “emerging markets fund” to focus on rebuilding downtowns in the area using input solicited from community members.
To recruit local involvement, Renaissance Downtowns relies on “crowdsourced placemaking.” The company opens an office in the development zone and staffs it with local residents, explains McLean. Those staffers hold daily community meetings and office hours. The company also launched a website, Source the Station, to provide information to residents.
In fact, the hotel at Huntington Station wasn’t even on Renaissance’s radar. But the community spoke and Renaissance’s market analysis confirmed the area was ripe for a hotel.
“The challenge for us is always gaining the trust of the community and gaining their activity,” says McLean. “We concentrate on activating the silent majority to make sure they’re at the table rather than just the 10 squeaky wheels. Then we get the majority what they’re looking for in their community.”
When it comes to calculating the return on investment on TOD in the Northeast, McLean says it’s directly related to the distance from the development to the nearest major metro area. The closer the TOD project to Manhattan, for example, the better the return.
Like McNally, McLean says parking remains a challenge when it comes to financing TOD projects, as some lenders remain skeptical about the viability of projects that deemphasize parking. “Lenders are still looking for one to one-and-one-third spaces per unit.”

Long-Range Planning Pays

It’s taken 10 years, but sales will begin this April for the TOD at the Washington, D.C., Metro’s Shady Grove stop in Montgomery County, Md., reports A.J. Jackson, managing partner at EYA, a TOD--focused developer based in Bethesda, Md. Residents are expected to start moving in by year’s end. The project, which is also adjacent to the Shady Grove station for MARC, Maryland’s commuter rail system, will include 1,100 one- and two-bedroom apartments, 400 townhomes, 15,000 square feet of retail, and 130,000 square feet of commercial space all within steps of the station.
What took so long? EYA purchased land a dozen years ago near—but not next to—the Metro station. It then decided its project would be more successful for both it and the community if it were located adjacent to the station on property then owned by the county. It took all that time for EYA to convince county officials to buy EYA’s land and sell EYA the land next to the Metro station. That required relocating all the operations that existed on the county’s property, which included a transit bus depot and a massive kitchen where public school lunches were prepared. In exchange, EYA agreed to shepherd both properties through the required zoning and approval processes so it and the county ended up with -development-ready land.
Fifteen percent of the project will include moderate-income housing (for those who earn 60 percent or below of the area’s median income) and another 10 percent will be workforce housing (for those who earn 80 to 115 percent of the area’s median income), says Jackson. Rentals are expected to draw from $1,100 to $2,600 per month. Townhomes will likely range from $185,000 to $400,000 for the moderate-income and workforce housing, while market-rate units will range from $650,000 to $800,000.
EYA is financing the $550 million project with traditional debt and equity. It’s relying on funding from institutional investors for the townhomes and condos, in addition to loans from commercial banks. 
“When it comes to developments with units for sale, rather than leasing, demand and values have remained strong for infill in general, so lenders have been aggressive in seeking our business, Jackson says. “On the other hand, financing for multifamily rental has been tighter because there’s a lot of supply.”
Because infill projects are generally riskier and more time consuming than other projects, Jackson says, developers tend to focus on projects with an ROI that justifies the extra effort. “There’s a lot of up-front risk in these projects, and those cost are typically funded from equity.”
Jackson agrees with colleagues that planning for parking can be tricky. At Shady Grove, townhomes have attached parking for one or two cars while rentals have fewer allotted parking spaces. “One consideration is who’s moving into the units. You may be doing larger units targeted for empty nesters. They may be less willing to give up their cars,” he says. You also have to think about what amenities are within walking distance. The higher the Walk Score, the less parking you need.
Bottom line: You can’t just throw up a development near a subway station and call it a day. Transportation (and not necessarily rail; good bus service also qualifies), walkability, and neighborhood amenities are all factors in successful TOD, he says. “It’s a dynamic analysis.”