February Newsletter about Mortgage Downpayments

Hello from Beautiful Beaufort, SC on this 73 degree February day!
I hope this finds you doing well and staying warm this winter regardless of where this finds you.  Spring is just around the corner and I hope you are as excited as I am to see the flowers start blooming!

I wanted to share the below article with you about Mortgages and down payments.  It provides great tips for novices and good reminders for experienced real estate professionals.  As always, if there is anything I can do to help with your real estate needs in the Beaufort and surrounding areas of Bluffton and Hilton Head, please let me know.  My information is below and I would love to hear from you.

The Mortgage Professor: What is a down payment, anyway?

BY JACK GUTTENTAG, The Mortgage Professor

I recently set out to write about a new program of down payment insurance but quickly realized that such an article should be prefaced by another one that clarified what the down payment is and what it is not. Look for the piece on down payment insurance next week.

To a homebuyer, the down payment is the sale price less the mortgage loan amount. It is not the same as the buyer's cash outlay, although the two are often confused. They differ by the amount of settlement costs charged to the buyer. For example, if the price is $100,000, settlement costs $5,000 and the buyer has cash of $20,000, the amount available for down payment is only $15,000. That is why many homebuyers pay a higher interest rate in exchange for a lender rebate that will cover some or all of the settlement costs.

The down payment is also not the same as the owner's equity, except on the day of the purchase. Owner equity is what the owner could net from selling the property. Where the down payment is a one-time measure as of the purchase date, owner equity changes month by month. It will rise above the down payment as the mortgage loan balance is paid down, and as the market value of the house rises, due either to property improvements or to market changes. Of course, owner equity can also decline if house prices fall, as many owners discovered during 2007-2009.

One of the questions I get with some frequency is whether, in the case where the appraised value is higher than the sale price, the difference can be counted as part of the down payment. The answer is no. From the lender's perspective, the property value used in determining the down payment is the sale price or appraised value, whichever is lower. The only exception to this is when the seller provides a gift of equity to the buyer, who is almost always a family member. In this case, the lender recognizes that the house is being priced below market and will accept the appraisal as the value. Most lenders in such cases will require two appraisals, and they will take the lower of the two.

Another common question is whether land purchased as part of a plan to construct a new home can be used as down payment. The answer is yes, but how the land is valued for that purpose depends on how long it has been held. If the owner has held the land for awhile, the lender will appraise the completed house on the lot, and the difference between the appraisal and the cost of construction will be viewed as the down payment.

For example, if the builder charges $160,000 for the house and the appraisal comes in at $200,000, the land is assumed to be worth $40,000. A loan of $160,000 in this case would have a down payment of 20 percent.

If the land was purchased recently, however, the lender will not value it for more than its purchase price. If the price was only $30,000, for example, the lender will value it at $30,000, and the down payment will only be 15.8 percent.

While homebuyers tend to focus on the down payment, underwriting and mortgage insurance requirements are defined in terms of the ratio of loan amount to property value, or LTV, where property value is always the lower of sale price and appraised value. One measure is easily converted into the other using the formula of: Down payment equals 1 minus LTV. Home buyers can avoid having to purchase mortgage insurance, for example, if the LTV is no more than 80, meaning that the down payment is no less than 20. Using LTV avoids possible confusion regarding what is included in the down payment, including the confusion regarding settlement costs noted above.

From the borrower's perspective, a larger down payment means a lower mortgage insurance premium. For example, a home purchaser with a good credit score who puts 3 percent down on a conventional loan (LTV is 97) will pay a monthly mortgage insurance premium about twice as large as the premium on an otherwise identical loan with 5 percent down, and four times as large as the premium on an otherwise identical 15 percent loan. With 20 percent down (LTV equals 80), no mortgage insurance is required.

House purchasers who need mortgage insurance to buy their first house usually aim to accumulate sufficient equity in that house that when they upgrade to their next house, they won't need mortgage insurance. An interesting new tool designed to facilitate that process, called down payment insurance, is discussed next week

Read more here: http://www.islandpacket.com/news/business/real-estate-news/article57038218.html#storylink=cpy


December 2015 Newsletter update

I hope this newsletter finds you well and enjoying the Holiday Season!  
The information below shares tips on how to save on your electric bill.  It gave me some helpful hints and I thought you might enjoy the information as well!

Have a safe and Happy Holiday Season!!!



How to Save Money on your Electric Bills by Laura Adams on www.quickanddirtytips.com

Tip #1: Install More Plants
One of the best ways to stay cool is to block heat from getting into your home in the first place. Installing more leafy plants and trees around your home is a great way to improve its curb appeal and help reduce the amount of sun shining on your roof, windows, and outdoor air conditioning unit. 
Tip #2: Cover Your Windows
To keep heat from coming into your home, close your window blinds or curtains—especially during the hottest part of the day. You can also install outdoor awnings, solar screens, or window film on the outside of your windows to intercept or reflect solar energy.
If you need new windows, consider upgrading to high-performance products that have special coatings. They can filter out up to 70% of the heat while allowing the full amount of visible light to come through.
Tip #3: Adjust the Thermostat
When it’s warm, every degree you choose to raise the thermostat above 78 can reduce your cooling costs by as much as 10%. So keep your home at the highest comfortable temperature possible and turn it up a few degrees before you leave for work or go out of town.
If you have trouble remembering to adjust your thermostat, you can install a programmable thermostat that automatically changes the temperature at preset times. They cost as little as $25 and are estimated to save the average consumer about $180 a year.
Tip #4: Select Your Fan Speed
If you live in a humid part of the country, one way to dramatically reduce the humidity in your home is to reduce the internal fan speed on your air conditioning system.
Slowing down the movement of air through the machine allows it to remove more moisture, which makes you feel much cooler. If you live in a dry area, it’s better to keep the fan speed high. 
If you can’t adjust your fan speed from the thermostat, call a service professional to see what speed your air conditioning unit is currently on and change it for you, if needed.
Tip #5: Use Permanent Air Filters
Maintaining your air conditioning system is critical for keeping it running well. Dirty air filters restrict air flow and cause the system to become inefficient, use more electricity, and cost you more money.  So change disposable filters at least once a month—or switch to a permanent air filter that you clean instead of throw away. A reusable filter is more expensive, but will save you money in the long run by cutting your energy bills and prolonging the life of your air conditioner.

Switch to a permanent air filter that you can clean instead of a throw away.  It is more expensive, but will save you money in the long run.
 Tip #6: Use Fans
Portable fans or ceiling fans are inexpensive and allow you to raise your thermostat several degrees and feel just as comfortable in the summer. Just remember that fans cool people, not air—so be sure to turn them off when you leave the room.
There’s a switch on most ceiling fans that reverses the direction of the blades. Make sure they’re turning counter-clockwise at medium or high speed during the summer so air is pushed down to cool you off. During the winter you can run ceiling fans clockwise at low speed to gently circulate warm air that rises.
Quick and Dirty Tip: To prevent your air conditioner from working overtime, keep your interior doors and air vents open so air can circulate freely throughout your home.
Tip #7: Use a Microwave
Cook with a microwave oven when you can during warm weather. They’re inexpensive and use up to 30% less energy than a traditional oven. Plus, they don’t generate heat in the kitchen.
Tip #8: Upgrade Your System
If you need a major repair on an older air conditioning system, consider replacing it with a new energy-efficient unit. They are more expensive, but can cut your energy costs in half.
The best systems have a SEER rating, or Seasonal Energy Efficiency Ratio, of 14 or higher.
Installing energy-saving products can also qualify you for a credit on your utility bill. So do some research on your energy company’s web site for recommended products and savings opportunities.
Also, check the online Database of State Incentives for Renewables and Efficiency for financial incentives from the federal, state, and local governments when you replace appliances with more energy-efficiency models.
Tip #9: Seal Leaks
If you have lots of cracks around windows and doors, that can be as wasteful as leaving a window wide open all year long! Use inexpensive caulk or expanding foam to seal cracks that are draining your money.
Most energy companies offer a free program to help determine whether you have leaky air ducts and other inefficiencies in your home. Make an appointment for an energy home inspection—you might be surprised by how much they can help you save!
Tip #10: Sign Up for Energy Programs
Visit your power company’s web site to find out if they offer an energy management program. You may be eligible to enroll some or all of your appliances in a system that temporarily powers them down during occasional periods of high energy demand. 
The power company installs a small switch on equipment that you enroll in the program, like your water heater, pool pump, or central air conditioner. If you’re willing to give them control over this equipment during limited times, you’ll receive a nice rebate. This is a great option for people who are away from home during a large part of the day.
- See more at: http://www.quickanddirtytips.com/money-finance/saving-spending/how-to-save-money-on-your-electricity-bill#sthash.wVdrUYgy.dpuf

Chamber business spotlight of the week

2.1.16 - I was so excited last week to be chosen as Beaufort Chamber business spotlight for the week.  I am attaching the video that they took showing an overview of my business and skills.  Being affiliated with Coldwell Banker Platinum Partners is wonderful.    After changing agencies two weeks ago to Coldwell, this way was a nice way to start my second week.  


Thanks for visiting my blog.  I will be updating the state of the market in next weeks' blog.  I will be posting a February newsletter with more information & helpful hints to help you if you are buying or selling real estate.

January 2016 Newsletter

I hope this newsletter finds you well and you are enjoying the start of 2016!  

Thought I would share some helpful tips on why using a Realtor can actually save you money!

If there is anything that I can do to help in your Real Estate needs or answer any questions, I would love to help.  Please don't hesitate to reach out to me.  My contact information is below.

Happy January 2016!!


Item Author Written by  John Dale in MyRealtytimes.com

Date created on Tuesday, 18 August 2015 8:34 pm

It would seem that home buyers and home sellers alike have, at one time or another, felt as though they may be able to tackle the process of purchasing or selling their home without the assistance of the realtor. The main purpose behind this is to save on the fee associated with employing a realtor, but in the end, these valiant efforts end in ruin as more time is taken, more costs is incurred, and more stress is involved.

Time is perhaps our most precious asset amidst today’s busy schedules, hectic lifestyles, and overtaxed workloads. So taking away from your limited free time by painstakingly searching through listing after listing of Lower Mainland properties, followed by setting up viewings, does not a happy human make.

Alternately, you and your realtor can collectively come up with a list of primary desires you are looking for in a home, and have him or her spearhead your search, narrowing down your options to a fine science of specifically selected homes within your realm of expectations.

Why Hiring a Realtor Saves You Money

Time is money, so we already have a savings on that front with the aforementioned efforts. Aside from that, and perhaps even more importantly, a realtor has the knowledge necessary to understand fair market pricing, as well as the skills to negotiate on price (down for buying, up for selling), the ability recommend brokers or lending institutions that harness the best rates, and the know-how to manage your paperwork without errors or oversights that you might fall prey to without such extensive knowledge, adding to your error margins and cost within such errors.

Why Hiring a Realtor Saves You Stress

The last two reasons why hiring a realtor can help you likely already attested to this fact, but add to that the fact that you have a confidant with whom you can talk to about your financial concerns, your potential pitfalls with a fluctuating market, advice regarding a growing family (schools, community centers etc), or a myriad of other factors. When you hire a realtor, you’re not alone in all these decision-making processes and life projections, but have a professional you can lean on and troubleshoot with.