What is a mortgage and how does it work?

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Back view Of Happy Couple Dreaming Of Their New Home And Furnishing On Blue Background. Family With Sketch Drawing Of Their Future Flat Interior.

Unless you have the ability to pay all cash for your new home, you’ll need a mortgage.

What is a mortgage? It’s a loan from a financial institution used to pay off the home’s sellers. It comes with a lien against your new home, and with your promise to the lender to make timely payments of both principal and interest, and to keep property tax and homeowner’s insurance payments up to date. In many cases, taxes and insurance are added to your monthly payment and held in escrow for the bank to make those payments.

Unless you made a down payment of 20% or more of the purchase price, your payments will also include mortgage insurance – which does not protect you, but protects the bank in the event of your default on the loan.

When planning to buy, first take a look at your credit score and debt-to-income ratio.

Low credit scores and high debt to income ratios can either destroy your chances of getting a mortgage loan, or put you into a high interest bracket. So get a copy of your credit report and scores.

If you need to do some work to get those scores up, get started right away. If you’re not sure where to start, please feel free to call us at the Mike Clover Group. We’ll be happy to give you tips and advice. Meanwhile, be sure to make every payment on time, and don’t take on any new debt.

Look at your debt to income ratio. You’ll find it by dividing your monthly debt by your gross monthly income. If the number is more than 43%, you need to begin paying off some obligations and reducing your debt.

Next, get mortgage pre-approval.

The maximum amount of your loan and the interest you will pay on that loan will depend upon your financial picture at the time of application. So before you begin to shop, it’s wise to get pre-approved for your mortgage loan.

You may have already been pre-qualified, and that can be helpful to you in your planning, but note that pre-qualification is not the same as pre-approval, and it carries no weight with banks or will home sellers. It is based only on a conversation between you and the lender, with no verifications.

Pre-approval consists of a lender getting the same information from you and doing the same verifications that he or she would do if you were making the actual loan application. Your income, your employment history, your assets, your debts and obligations, and your credit scores will all come into consideration.

Pre-approval, which should take no more than 2 or 3 days, gives you two advantages:

  1. You’ll know what you can afford, so you’ll look at the right houses. Beginning the search with homes that are out of your range is disheartening. Once you’ve seen, and fallen in love with, a home you can’t afford, the houses you can afford will have little appeal.
  2. You’ll have a far greater chance of having your offer accepted, or at least considered, than you would with no letter of pre-approval. Sellers aren’t interested in waiting to see if you can get a loan.

Don’t jump at the first mortgage loan you see – shop around.

Research the different types of mortgages and the programs offered by different mortgage brokers and banks before you decide.

First, there are two basic types of mortgage loans – fixed rate and adjustable. With a fixed rate loan, the interest rate will not change for the duration of the loan. The only time your payment will change is when your taxes and insurance change. This is a good loan for a borrower who likes the security of knowing the amount of their payment for the next 15, 20, or 30 years.

An adjustable rate mortgage generally starts out with a lower interest, but is subject to change after a pre-set number of years. (Usually 5 years) The interest rate will have a ceiling, or cap, but can still rise substantially. The difference between a 4% and a 5% interest is about $60 per month per $100,000 owed.

Next, different lenders have different programs and fees. Some, like the Mike Clover Group, can close your loan in 30 days, while others might take 45, 60, or even 90 days.

Apply for your mortgage loan

A common misconception is that once you’ve gotten a pre-approval and/or made a loan application, you’re stuck with that lender. Not so.

Once you’ve made application, you should receive a loan estimate that includes closing costs, the interest rate, and the monthly payment, including principal, interest, taxes, homeowners insurance, and mortgage insurance.

You have every right to take the same information to another lender in order to compare offerings and fees. We at the Mike Clover Group are proud of the fact that our interest rates and loan fees are among the lowest available in Texas.

Note that while letting a retailer check your credit at this time can harm your credit score, making multiple mortgage loan applications will not. The credit bureaus recognize that you’re not trying to take out two or three home loans – you’re shopping.

After you approve the loan estimate…

Your file will go to the underwriter for final approval, and as long as there are no mishaps, you’ll be on your way to closing.

Mishaps? What can happen after the loan is approved?

Your financial picture can change. You can apply for credit at a retail store or get a new credit card. You can co-sign a loan for a friend. You can change jobs or quit your job. You can buy a car or furniture for your new house. You can book a vacation, using a credit card as security. You can be late paying a bill.

The time between your loan approval and closing is critical. Do nothing to change your financial picture, and make no purchases beyond ordinary living expenses.

If you have questions, just call. Here at Homewood Mortgage, the Mike Clover Group, we’re always happy to answer. Reach us today at 800-223-7409.

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Homewood Mortgage,LLC

O: 469.621.8484

C: 469.438.5587

F: 972.767.4370

18170 Dallas Parkway

Ste. 304

Dallas, TX 75287

NMLS# 234770

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30 Year Fixed Jumbo Loans

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Jumbo loans – not as jumbo as you may think

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Beverly Hills, CA, USA, January 16, 2016: California Dream Houses Beverly Hills .Beautiful homes and estates in Los Angeles, CA.

 

When you hear the term “Jumbo loan” you might think of loans in the millions, but that’s not so.

A jumbo loan is a home mortgage loan for any amount that exceeds the loan limit on conforming loans. In most areas, including Dallas / Fort Worth, that limit is $424,100. In high-home cost areas, the limit is $636,150. In areas outside the contiguous United States, the limits can be even higher. Limits are also higher when purchasing properties with 2, 3, or 4 housing units.

These limits are set by Fannie Mae and Freddie Mac, and are based on a county’s median household income.

Jumbo loans are available for primary homes, vacation homes, or investment properties, and can be either fixed-rate or adjustable rate mortgages.

After the housing crisis and the enactment of new regulations under the Dodd-Frank legislation, many mortgage brokers pulled out of the jumbo loan business, leaving them to the large retail banks. Homewood Mortgage, however, continues to offer Jumbo Loans, and – as with all of our offerings – at very competitive rates.

Requirements are a bit stricter…

Since lenders have more at risk, they need a bit more assurance that the borrower has the ability to repay their jumbo loans. Thus, while a conventional loan can be obtained with credit scores as low as 620, most lenders require a score of 700 for a jumbo loan.

Here at Homewood Mortgage, we can go as low as 680.

In addition, down payment requirements are higher. While some lenders require 25% down (or a loan to value of 75%) we at Homewood Mortgage require 20% down.

Debt-to-income ratios (DTI) are also lower. Your debt to income is calculated by dividing your minimum monthly debt by your gross monthly income. For most conventional loans, debt can equal 45% of your monthly income. For a jumbo loan, that number is generally reduced to 38%. We will go up to a 43% debt to income ratio.

As with all mortgage loans, a variety of risk factors are considered both for loan approval and for the interest rate, debt-to-income ratio, and the loan to value ratio that the lender will approve.

With housing prices rising across the U.S., the number of jumbo loans compared to conventional loans is also increasing. Numbers for last year are not yet available, but the Wall Street Journal reported that jumbo loans reached 24% of the total in 2015, up from 21% in 2014.

When a jumbo loan is what you need, call the Mike Clover Group at Homewood Mortgage. We not only have low interest rates, we offer low closing costs and a fast turn-around.

Reach us today at 800-223-7409

mike-clover-group-email-signature-muy-grande

Mortgage Banker

Homewood Mortgage,LLC

O: 469.621.8484

C: 469.438.5587

F: 972.767.4370

18170 Dallas Parkway

Ste. 304

Dallas, TX 75287

NMLS# 234

 

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Are you financially ready for home ownership?

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Woman dreaming of financial success

If your dream of home ownership is becoming more of an obsession than a dream, it’s time to take a look at your finances and see if you’re ready to make the leap.

If you can answer yes to these 5 questions, then it’s time to get serious about seeing a lender, getting pre-approved, and beginning the home search:

  1. Am I planning to stay in the community for the foreseeable future?
    This has nothing to do with your finances, but it is the first consideration. It’s not wise to buy if you know you’ll need to sell in just a couple of years.
  2. Am I debt-free and do I have money in the bank?
    Not only do you need money for a down payment, you should have an emergency fund equal to at least three months’ of routine expenses.

    This will ensure that you’ll be able to handle unexpected expenses and unexpected gaps in income. You don’t want to lose your home because of an accident, illness, or job lay-off.

    If you’re not there quite yet, get started! Pay off your debts one-by-one until they disappear. When one is paid off, add that payment to the account that’s next on your list. When you have them all out of the way, commit those funds to your savings account.

  3. Do I have an adequate down payment saved?
    While some programs are offering extremely low down payments again, taking advantage of them isn’t always wise. Strive for at least 10% down – and go for 20% if you can. Once you reach the 20% mark you’ll be able borrow without the burden of paying mortgage insurance.

    That will not only feel good because you’re not throwing money away, it will mean you are able to spend more on the monthly principal and interest payments. After all, mortgage insurance adds approximately 1% of your loan balance to your monthly payment. (On a $200,000 mortgage loan, that’s $2,000 per year, or $166 per month.)

    Speaking of that payment, it’s wise to limit your payment to no more than 25% of your monthly take-home income.

  4. Do I have enough extra to pay my closing costs?
    While it’s true that some sellers will agree to cover those costs, not all do. You should be ready to pay them yourself. These costs can amount to between 2 and 5% of your home’s purchase price, so for a $200,000 home you’ll need between $4,000 and $10,000.


What are these costs?

The loan origination fee

Home and pest inspection fees
Appraisal fees
Prepaid property taxes, homeowner’s insurance, and mortgage insurance
Title insurance to cover your lender
Recording fees
Underwriting fees

Different lenders charge different fees, so you won’t know the exact amount needed until you’ve made your loan application. Be prepared!

You are entitled to receive your final closing papers 3 days prior to closing, so be sure to read the fees carefully and do question anything that wasn’t in your original estimate and anything for which the amount has changed dramatically.

  1. Can I afford the cost of moving?
    You may have friends with trucks and muscles who will help you do the actual moving, but even if they work for free you’ll be expected to provide refreshments. And if you don’t have those friends, you’ll need several hundred dollars to pay a commercial moving crew.

    In addition, you’ll need to purchase supplies such as packing boxes, bubble wrap, tape, marking pens, etc. You’ll also need cleaning supplies, and if you plan to do any painting or other fix-up before you move in, you’ll need those supplies.

    Now add in deposits on utilities and the cost of any appliances that weren’t included in your home purchase.


In order to plan ahead, get estimates for these items, then pad that budget a little to allow for something unexpected.

 

Don’t ignore this major money-saving move: Hire a buyers’ agent.


Hiring a buyers’ agent is one of the most important things you can do to ensure a smooth transaction.

 

Because agents are familiar with the houses in their market, and because they have access to both the MLS notes and the listing agents, your agent can shave days or weeks from your house hunt.

 

Because agents know the going prices in their markets, an agent can also guide you in making reasonable offers and protect your interests in negotiations.  They’ll also keep you out of trouble by making sure you’ve seen all the appropriate disclosures and have included the correct contingencies in your offer.

 

Except in special circumstances, buyers’ agents are paid by the seller through the transaction, so you get valuable protection at no additional cost to you. Don’t risk purchasing a home without it!

 

Are you ready to get pre-approved and start the search for your new home?

If so, or if you’re not quite sure, get in touch with us at Homewood Mortgage – the Mike Clover Group. We’ll be glad to answer your questions and do a pre-approval to let you know exactly where you stand.

 

We offer fast service and the lowest rates and fees available in Texas, so call the Mike Clover Group at 469.621.8484.

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Mortgage Banker

Homewood Mortgage,LLC

O: 469.621.8484

C: 469.438.5587

F: 972.767.4370

18170 Dallas Parkway

Ste. 304

Dallas, TX 75287

NMLS# 234770

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Stop! Before you dive into a mortgage you can’t afford…

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Children sitting on the floor and holding their piggy bank

If home prices in your area are rising and you’re worrying about ever becoming a homeowner, stop and think.

Remember all the families who lost their homes after the real estate bubble burst? Many of them were in over their heads, simply because they got in a panic and purchased when they should have waited.

So what should you do? First, consider your options. To do that, you need to evaluate your financial position as it stands today.

Look at how much you have saved and how much you have coming in each month.

The safest, least expensive way to purchase a home with a mortgage is to make a down payment of 20% of the purchase price. That eliminates the need for mortgage insurance and lowers your monthly payment. You can get a loan with as little as 3% down – but should you?

After making a down payment, you should have reserve funds to cover not only closing costs and moving expenses, but unexpected repairs to your new house. Things do happen.

The rule of thumb is that you should spend no more than 25% of your monthly take-home pay on your mortgage payment. Whether you should spend that much depends upon your income and your other obligations. Remember also that you should continue putting money aside – for home maintenance and for your future.

Remember that when a lender qualifies you for a specific amount, he or she doesn’t know your lifestyle and doesn’t know about your family obligations. Use your own common sense and good judgement.

Now that you’ve looked at your situation – should you (or can you) buy the home of your dreams right now?

If the answer is no, consider these three options:

First and most obvious – keep saving.

Make sure you and your spouse are in agreement, then work to pay off any outstanding debts and put more away toward your down payment.

At the same time, work on ways to increase your own income. With a bit of extra effort could you get a promotion and a raise in pay? Do you have a side business you could spend more time on and cause it to grow? Could you take a second job part-time to gain those down payment funds?

How about reducing the outlay? Would it be worth skipping that concert or dinner out to put an extra $200 in the down payment fund? Do you really need that new swimsuit this season? Can you live without those new shoes, a new golf club, or the latest iPad?

A few lifestyle changes can build that fund faster than you might think.

If you’re determined to buy now…

Re- think what you really must have.

REALTORS® today report that most buyers – even first-time buyers – are looking for homes that appear sparkling new. They want move-in ready, with all the latest upgrades to kitchen and baths. They want fresh paint, new flooring, and a landscaped yard.

As a result, there’s extreme demand for houses that fit the description. Quite often there are bidding wars and the selling prices rise beyond the asking prices.

Meanwhile, perfectly good homes that need a little work are often ignored – and their prices reflect it.

For the difference in the price – and in your monthly mortgage payment – you could afford to make those upgrades yourself, a little at a time. The bonus to that is you’d be the one choosing the materials and colors, and the house would become uniquely yours.

Follow these guidelines to make a smart investment in a “less than perfect” home:

  • Choose a neighborhood with rising values
  • Look for a neighborhood with good schools – even if you don’t have children
  • Buy the least expensive house in the best neighborhood you can afford
  • Get a home inspection to make sure there are no major repair expenses lurking behind the walls, ceilings, or floors.

Choose a real estate agent who understands your goal and will work with you to achieve it.

Finally, widen your search.

Talk with your real estate professional about prices in various areas. Naturally you’ll need to consider travel time and expense to work, but it may save you big dollars to buy in the suburbs rather than the city.

This is especially true if property taxes within the city are high.

In some cases, the reverse is true. So ask your agent: “Is it cheaper to own a home in the city or the suburbs?”

And – what if you chose an entirely different city? Does your employment offer opportunities for relocation? If not, would your skills make it easy for you to find new employment somewhere else?

Housing in the top metro areas in the U.S. is going up in price due to low inventory levels. Other cities which might be just as attractive to you and yours still have affordable prices.

Choose a real estate pro to help make your housing dreams come true.

Now is not the time to take pity on a struggling agent – it’s the time to choose someone with experience and the skills to help you achieve your goals.

  • Look for an agent who knows the market and will share his or her knowledge with you – so you know which areas are improving, which are declining, and which offer the best buys.
  • Look for an agent with proven negotiating skills.
  • Look for an agent with strong connections in the industry – he or she is the one who knows about properties even before they are offered to the general public.
  • Look for an agent who can and will explain every detail of a contract to you, who will answer your calls promptly, and who will monitor your transaction from offer through closing.
  • Look for an agent who will take pride and pleasure in handing you the keys to your new home.

Talking with a lender is a wise first move…

If you’re ready to learn your current homebuyer status, contact the Mike Clover group at Homewood Mortgage.

We’ll be happy to go over your finances with you and let you know what you qualify for today. If it turns out that the time is right, we’ll get you pre-approved so you can move forward with confidence. We’ll even give you a list of experienced, enthusiastic REALTORS® if you haven’t already made your choice.

Call the Mike Clover Group at 800-223-7409

mike-clover-group-email-signature-muy-grande

Mortgage Banker

Homewood Mortgage,LLC

O: 469.621.8484

C: 469.438.5587

F: 972.767.4370

18170 Dallas Parkway

Ste. 304

Dallas, TX 75287

NMLS# 234770

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The step-by-step process of a mortgage loan

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Young couple sitting on the floor and daydream about new home

 

Getting a mortgage loan isn’t mysterious, but it is a step by step process.

Step one: Shop for your mortgage.

All loans and all lenders are not alike. They offer different interest rates, different closing costs, and different terms.  In addition, some lenders are attentive to your needs, keep you fully informed, and assist you in fixing any flaws in your application or your credit rating. Others are not.

So choose your lender and learn about the different loan programs as your first step toward home ownership.

Step two: Get mortgage pre-approval.

One of the biggest mistakes potential home buyers make is finding a home before finding a mortgage.

This is a huge mistake because in today’s market, it means those homebuyers will likely lose out on their first choice. Most sellers today aren’t willing to wait until a buyer finds a lender and becomes approved for a mortgage loan.

Note that pre-approval is far different from pre-qualification. Pre-qualification can happen with a phone call – and it means nothing.

During the pre-approval process your lender will check your credit, verify your debts, income, and employment, and do preliminary underwriting. To apply for pre-approval, you’ll need to provide the lender with the same information as you would if you were ready to purchase immediately.

You’ll need to provide:

  • Pay-stubs for the past 30 days, showing year-to-date income
  • Two years of W-2 forms from your employer or employers
  • Two years of federal tax returns
  • Two months’ statements or a quarterly statement of all your checking and savings accounts, as well as any CD’s, IRA’s, stocks, or bonds.
  • A list of all real estate currently owned.
  • Two years’ history of your current home mortgage – or two years’ information on your status as a tenant, including the name and contact information for your landlord.
  • If your down payment is coming from your parents as a gift, you’ll need to provide a letter that clearly states the money is a gift, not a loan.

Step 3: Go find that home!

Once you’re approved and know how much you can spend, go find that home. Choose a buyer’s agent who will guide you to homes you can afford and who will advise you about making reasonable offers.

Once you come to an agreement with a home seller, notify your lender and take him or her a copy of your purchase agreement.

You may want to pause at this point for a home inspection, since the results might lead to a re-negotiation or cause you to change your mind entirely.

Once you’re sure you’re ready to go forward, your lender will order an appraisal, just to make sure that the collateral you’ll be offering for your mortgage loan has enough value to cover your outstanding balance.

The appraiser will look the house over thoroughly, then compare it to similar homes that have sold recently in the same or similar neighborhoods. When the real estate agents have done a good job at pricing, the appraiser’s value will be very close to the price you’ve agreed to pay.

However, markets do change, so the appraisal could come in higher or lower. If it’s higher, congratulations, you’ve just gotten some instant equity. If it’s lower, you and the seller will have three choices:

  • Challenge the appraisal or get a second opinion.
  • Reduce the selling price.
  • Cancel the agreement.

The final steps: A title report and a last-minute check on your eligibility

When you purchase a home you “take title” to that home and it becomes the collateral in case you should default on the loan. Naturally, the bank needs proof that you will have clear ownership.

A title report starts with proof that the seller has the right to transfer the title to you and that there are no clouds on the title. A cloud could be an unpaid lien for work performed on the house, a tax lien, a claim of ownership from a 3rd party, or any number of other problems.

The title company, after doing a complete records search, will issue title insurance wherein they assume the liability for claims they may have missed during the search. You will pay for a title insurance policy that covers the lender. The seller will pay for a policy protecting you (which is not required but is recommended).

And finally – the last-minute check on you.

Many a buyer has found his or her hopes of home ownership dashed at the last minute because they didn’t listen to their lender and their agent when they said “Do nothing to change your financial status until after your loan has closed and funded.”

We’ve seen buyers purchase a new car or new furniture, obtain a new credit card, make reservations for a dream vacation, empty out a savings account, co-sign a loan for a family member, change jobs, or quit their job – just days before their loan was scheduled to close. As a result, their financial status changed and they were no longer eligible for the loan.

Do you want to buy a home?

If you’re not sure whether your credit rating and income will allow you to purchase, get in touch with us at Homewood Mortgage – the Mike Clover Group. We’ll be glad to answer your questions and do a pre-approval to let you know exactly where you stand.

Call the Mike Clover Group at 800-223-7409.

 

mike-clover-group-email-signature-muy-grande

Mortgage Banker

Homewood Mortgage,LLC

O: 469.621.8484

C: 469.438.5587

F: 972.767.4370

18170 Dallas Parkway

Ste. 304

Dallas, TX 75287

NMLS# 234770

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Could you cover a $400 emergency from ready cash?

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A Federal Reserve survey showed that nearly half of all Americans could not cover a $400 emergency without borrowing from someone, selling something, or putting the expense on a credit card.

That means that nearly half of all Americans aren’t saving any money.

Why aren’t Americans saving?

There are two primary reasons:

  • They aren’t earning enough to do more than cover basic needs.
  • Saving isn’t as important to them as instant gratification. It simply isn’t a priority.

It’s true that some folks barely earn enough to put a roof over their heads and food on the table. Some of them are getting by through careful spending and some are going farther into debt on credit cards each month.

Far more Americans do earn enough to save, but it isn’t a priority. They’d rather go out to dinner and a movie, buy new clothes, own the latest iPhone, or drive a new car.

It really isn’t safe to live that way, because those $400 – or $4,000 – emergencies do come along. When you have no money set aside, you are forced to borrow, usually on high-interest credit cards. And then the spiral into crippling debt begins.

And what about those future expenditures? Your savings can have any purpose you wish – retirement, college for the kids, a down payment on a home – or a bigger home, a new car, or a dream vacation.

You know you need to save, but how?

You might think you don’t earn enough money to begin saving, but the odds are – you do. The secret to finding that money is budgeting.

Have you heard of zero-based budgeting?

A zero-based budget is one in which your income minus your outgo equals zero. You plan how you will spend every last dollar.

Begin with those fixed expenses such as housing, insurance, and the power bill. Then include a figure for necessary spending, such as food and gasoline. Next assign an amount to savings before you decide how the remainder will be spent. And do decide. Assign a purpose to every one of those dollars.

That doesn’t mean you must spend it all – if your budget allows $200 for new clothes and you decide you don’t really need them, you have more to add to savings – perhaps for some more enticing purchase in the future.

Making a budget sounds intimidating, but it really isn’t. Money-guru Dave Ramsey  says his favorite budget app is Every Dollar. The Every Dollar program prompts you to remember all of those miscellaneous expenditures, so you don’t forget a thing. With it you can set up your money plan in about 10 minutes. The basic program is free, so there’s no reason not to get started today.

You can also take advantage of a free trial that connects to your bank account and uploads your transactions. It also lets you track your expenditures on the go, so you won’t be tempted to exceed your budget in any category.

It’s never too late to take control of your money – and the sooner you do take control, the sooner you’ll have more money to control.

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Mortgage Banker

Homewood Mortgage,LLC

O: 469.621.8484

C: 469.438.5587

F: 972.767.4370

18170 Dallas Parkway

Ste. 304

Dallas, TX 75287

NMLS# 234770

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Construction Home Loan Testimonial

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Money Myths that can keep you broke

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Myth #1: I don’t need to budget because I keep track of what I’m spending.

Keeping track of what you’ve spent is looking backwards. Making a budget is looking forward – it’s planning ahead so you’ll have money later for things you want to do or have.

Looking back at how you’ve spent your money is a good first step in preparing a budget. You can see where you spend the most and where you might exert a little control over your spending in order to save for a vacation, a down payment on a house – or retirement.

Myth #2: I’m too young to be concerned about retirement.

No, if you’re out in the world, working for a living, you are not too young. The truth is, the younger you are when you start, the easier it will be.

Step one: Get out of debt.

Step two: Create an emergency fund of three to six months’ worth of living expenses.

Step three: Look into retirement plans, putting money into IRA’s, etc.

Myth #3: Unless you have extremely wealthy parents who will pay your way, student loans are necessary to go to college.

The truth is, you absolutely can get a college education without going into debt. It’s not easy, but it will be worth the effort to begin your working life without that burden.

Look into college-specific aids and grants or federal and state grants. Work hard and earn scholarships. Get a part-time job during the school year and work full-time during the summer.

Myth #4: Car payments are simply a way of life.

No, they’re not. Driving a new car is a luxury and a status symbol – not a necessity. According to Experian Automotive, the average car payment today is $500 per month – which means $6,000 per year to own an “asset” that loses value each and every month.

For $6,000 you can buy a nice used car – one that will get you where you want to go just as easily as a $40,000 SUV.

A friend of mine told about wanting to trade-in her car that still had a year or two left on the payments. Even though she’d gotten a low interest rate, the car dealers all told her the car would “never be worth what you owe.” She decided to prove them wrong, and kept driving it for a couple of years after it was paid off. It was still worth several thousand dollars.

Myth #5: Debt is a tool.

This is a truth for some people, but a myth for most. Entrepreneurs who use debt to acquire assets that appreciate in value and generate a cash flow do use it as a tool. This is only after doing all the calculations – and sometimes even then they make a mistake.

Myth #6: Credit Cards are always evil.

No, not at all. Credit cards CAN be a tool and can even save you money, IF you use them correctly.

Credit cards can be a tool for bookkeeping, as they keep track of all your expenditures. Some even send you a year-end report categorizing all those expenditures. As long as they are paid in full each month, they’re a good tool.

Get a credit card with a good cash rewards program; use it for everyday expenses such as groceries and gasoline – then pay the bill in full each month. In a few months’ time you’ll have substantial cash coming back – which you can deposit directly into a savings or retirement account.

They can also be a safety net for times when an unexpected but necessary expense comes along – say when the furnace blows up and the temperature outside is ten degrees.

Credit cards are evil when mis-used.

When used for non-necessary expenses and you carry a balance from month to month, they’re a tool of destruction, eroding your income through interest charges.

Thousands of people overspend each Christmas, then make payments throughout the year on the gifts they gave. Go back to Myth #1 and make a budget. Put away enough each month to pay for those gifts as you buy them and you’ll save hundreds of dollars in interest charges each year.

Myth #7: Loaning money to family members is a duty or an obligation – and it shows you care.

The truth is – lending money to family members is a terrible idea. Quite often it doesn’t get paid back, and it does nothing but cause hard feelings.

A friend of mine told about lending her brother-in-law $1,200, which he never repaid. Did she and her husband feel resentful when the brother bought a new car, took an expensive vacation, or wined and dined his girlfriends every Saturday night? You bet they did. That loan caused a permanent rift between the brothers. They haven’t even spoken to each other in twenty years.

If a family member needs help and you can afford to provide it, make the money a gift.

Avoid the money myths and manage your money wisely – your future will thank you!

mike-clover-group-email-signature-muy-grande

Mortgage Banker

Homewood Mortgage,LLC

O: 469.621.8484

C: 469.438.5587

F: 972.767.4370

18170 Dallas Parkway

Ste. 304

Dallas, TX 75287

NMLS# 234770

Posted in Uncategorized | Comments Off on Money Myths that can keep you broke

How $300 can add $3,000 plus to the value of your home!

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When you offer your home for sale you want the highest selling price possible, right?

National Association of REALTORS surveys show that buyers will pay from 1% to 5% more for a house that’s been staged.

Why would they do that? Most likely because when a home has been  staged they can see its full potential. They can envision their own furnishings in the home and can imagine themselves living there. That’s nearly impossible to do when a house is over-full, cluttered, or overly reflective of the current owner’s individual style and tastes.

In addition, many of today’s buyers want a home that’s move-in-ready. They don’t want to clean, paint, or do any fix-up.

Here are 6 ways you can make your home appeal to the widest variety of home buyers:

One: De-clutter relentlessly. Pack up all your off-season clothing, toys, and tools and put them in storage. Then attack your linen closets, kitchen cupboards, and other storage spaces – both in the home and the garage.

Keep only the things you use regularly. Store the things you want to keep for later use and donate the rest. While you’re at it, get rid of all those dried-up cans of paint, empty containers, and anything else that should have been put in the trash long ago.

Do you have too much furniture or furniture you never use? Either donate it or put it in storage.

Organize and put away everything you have left. Follow the old saw “A place for everything and everything in its place.”

Cost: Zero, unless you hire someone to help or have to pay a dump fee.

Two: Clean everything – from the floor to the ceiling. Get that vacuum out and attack the whole house, including the corners, then scrub all the “scrubbable” surfaces. Wash or dry clean the curtains/drapes. Shampoo the carpets and upholstered furniture. Use a good wood cleaner such as Murphy’s Oil Soap on varnished wood furniture.

Thorough cleaning is a huge job, so you might want to invest in help for a day or two. At an estimated $15 per hour for cleaning services, it’s well worth the cost.

Cost: That depends upon the size of your house and how much of the work you’ll do yourself.

Three: Neutralize. Your decorating flair might be a bit too extreme for most buyers, especially if you lean toward dark colors or a different color in every room. Re-paint the rooms in one of this season’s most popular neutrals. While white is making a comeback, soft greys, pale blues, and pale sage are also considered neutral today.

Cost: Of course it depends upon the size of your house and how many rooms need a new coat of paint. One gallon, which should cover about 400 square feet, costs from $30 to $40 per gallon. However, if you plan ahead and watch for sales at the major hardware chains, it’s sometimes on sale at two for the price of one.

Four: Now that you’ve de-cluttered and repainted, take a long hard look at your spaces. First, re-arrange the furniture you’re keeping in the house. Then reclaim areas of the house that had been turned into toy repositories or catch-all spaces. What’s the “highest and best use” of those newly open spaces? Stage them to suggest those purposes.

Cost: Zero, unless you hire a stager.

Five: Turn the master bedroom into an inviting, relaxing retreat. Move out the exercise equipment. Purchase a new comforter set, curtains, and perhaps matching lamps for the nightstands. Make the master bath look like a spa with huge, fluffy towels, matching bath rugs and shower curtain, and a silk flower arrangement. Switch out your out-dated faucet and drawer/cabinet pulls.

Cost: This will depend upon your taste and your shopping acumen. But remember, that comforter and those towels, bath rugs, etc. will be going with you to your next home. You should be able to replace the faucet and drawer/cabinet pulls for well under $150.

Six: Wow them with curb appeal. Rent a power washer and clean the whole house. Then repaint the doors and any window/door trim that is cracked or peeling. If your porch light is sadly dated, replace it with one of the new styles.

Invest in a new, cheerful door mat and arrange some pots of brightly colored flowers near the front entry.

Finish the job by mowing the lawn, trimming the hedges, weeding the flower beds, and applying a fresh layer of mulch.

Cost: Rent a power washer for about $60 per day. A gallon of paint is approximately $30. A new porch light should run $40 to $60, and a bag of mulch is about $30.

As you’ve seen, making your house show-ready takes more effort than expense, but you should be able to complete any of these projects in 3 days or less and $300 or less.

Before you decide where you spend your money, consult with your real estate professional. He or she will be able to tell you what today’s buyers are looking for and thus direct you to the most profitable projects.

 

mike-clover-group-email-signature-muy-grande

Mortgage Banker

Homewood Mortgage,LLC

O: 469.621.8484

C: 469.438.5587

F: 972.767.4370

18170 Dallas Parkway

Ste. 304

Dallas, TX 75287

NMLS# 234770

Posted in Uncategorized | Comments Off on How $300 can add $3,000 plus to the value of your home!