Don’t fall victim to the financial risks and mental stresses associated with owning a home. Appliances have set lifespans, breakdowns are inevitable and repairs and replacements are costly. Make sure your home is covered, so you and your wallet can rest assured that your home is taken care of.
(BPT) - Nobody bats an eyelash when it comes to buying homeowner's insurance, but many homeowners don’t apply that same logic to planning for home repairs — not what might happen, but what will happen.
Only a fraction of the 120 million U.S. households today are protected by a home services plan, also known as a home warranty.
That number is growing, as homeowners recognize the value of coverage when appliances go on the fritz, hot water heaters run cold in the middle of winter or a leaky faucet drives up their water bill. Perhaps one reason more homeowners don’t have home service plans is because they think they are covered through their homeowner's insurance policy.
Homeowner's insurance doesn’t protect you from the natural home aging process.
Insurance kicks in when damage occurs from an outside force, like a busted sewer line or roof damage due to a major storm. While insurance covers you when Mother Nature strikes, it doesn’t protect you from the natural wear and tear that your home’s major systems and appliances go through during the aging process. Understanding how home service plans work and how they fit into your financial and risk-planning strategy allows you to be prepared for covered breakdowns, without breaking the bank.
Let’s start at the beginning. What is a home service plan?
Home service plans typically cover the repair or replacement of major home appliances, including refrigerators, washers, dryers, ovens or cooktops, and components of major systems like plumbing, HVAC and electrical.
When your air conditioning system breaks, or your washer or dryer stops spinning, you want the confidence of having a home services plan in place that will help protect your budget.
This is where the true value of a home service plan comes in. Home service providers such as American Home Shield accept service requests and assign professionals to diagnose the problem and offer a solution through its vast network of skilled and trusted contractors, which includes more than 15,000 licensed and qualified pros throughout all 50 states.
What’s the bottom line?
With a home service plan, you won’t pay the full cost of repairing or replacing items covered by your plan. Regardless of age, make or model, your contract helps cover the repair or replacement of items covered in your plan. For example, if your refrigerator malfunctions, your service provider will connect you to a quality contractor to diagnose and repair the problem. This can help reduce the hassle of repairing it yourself and help protect your budget.
Think about your home’s future (and yours).
Service plans can come in handy when selling a home. The appeal speaks for itself: When buyers are making that final decision around one of the biggest investments in their lives, having a home service plan in place gives the new homeowner confidence that the home’s systems and appliances are protected, and they won’t bear the entire financial impact of repairing or replacing it if it breaks down.
The choice seems obvious: Don’t fall victim to the financial risks and mental stresses associated with owning a home. Appliances have set lifespans, breakdowns are inevitable and repairs and replacements are costly. Make sure your home is covered, so you and your wallet can rest assured that your home is taken care of.
(BPT) - The homebuying process is exciting, but can also seem fraught with added costs, like a home inspection, title insurance and closing costs. And if you can’t afford a full 20 percent down payment on a conventional home loan, then you will most likely pay for private mortgage insurance (MI). Some people consider private MI yet another added cost, but it helps creditworthy middle-income homebuyers qualify for home financing sooner with a low down payment. Is it really an added cost if it saves time and money in the long run?
For most people, low down payment home loan options include conventional loans with private MI and government-backed loans like those offered by the Federal Housing Administration (FHA). While comparable, each of these options has important differences. For example, the minimum down payment for an FHA mortgage is 3.5 percent while it’s only 3 percent on a conventional, privately insured mortgage.
Another key feature of private MI is that it can be canceled when a borrower reaches 20 percent equity in his or her home. Borrowers who purchase a home with private MI can typically cancel it within 5 to 7 years, resulting in their monthly bill going down. Private MI’s cancelability makes it a more affordable option over FHA-backed mortgages, which typically require mortgage insurance premiums for the entirety of the loan term. Both are offered by most mortgage lenders, so it’s smart to ask a loan officer for both options so you can compare and do the math.
The myth that a homebuyer needs 20 percent down to obtain a mortgage is simply not true. Low down payment mortgages are widely available and used every day across the country. In 2018, the National Association of Realtors found that first-time homebuyers typically put down 7 percent, while repeat buyers put down an average of 16 percent. Many homebuyers choose a lower down payment option to preserve some savings for home improvements or save for other goals. The time it could take to save up a 20 percent down payment is significant. On average, it could take up to 20 years to save a full 20 percent, plus closing costs, for a $257,700 house — the national median sales price. With home prices on the rise, the amount of time it takes to save up could only increase. Private MI can mean the difference between getting into the home of your dreams sooner or waiting for years.
For over 60 years, more than 30 million homeowners of all backgrounds have used private MI to successfully buy their homes. In the past year alone, private MI helped more than one million borrowers nationwide purchase or refinance a mortgage. According to a study by U.S. Mortgage Insurers, 56 percent of purchase borrowers were first-time homebuyers and more than 40 percent had incomes below $75,000.
For decades, millions of homeowners and prospective homebuyers have relied on private MI to help them affordably and responsibly purchase their homes — in turn helping them build personal wealth. Today’s historically low mortgage interest rates are a good reason to buy a home now. It is estimated that in 2019, the average rate for a 30-year fixed-rate mortgage will be around 5 percent. Borrowers should take advantage of these historically low mortgage interest rates because experts forecast that primary mortgage rates are on the rise.
Getting a mortgage with private MI and keeping more of your hard-earned money in the bank can be a very smart way to invest in your future. Check out lowdownpaymentfacts.org to learn more.
(BPT) - Across the nation, thousands of seniors have used a Home Equity Conversion Mortgage (HECM), commonly called a reverse mortgage loan, as a savvy way to access the equity in their homes as part of their retirement strategy.
Those who are interested in a reverse mortgage loan should know that there are six main phases to the process: 1) educating and qualifying, 2) counseling, 3) approval, 4) funding, 5) using and 6) settling.
1. Educating and qualifying
The HECM process begins by contacting an FHA-approved lender who will review the borrower’s situation, educate them on the HECM program, and determine if they would likely qualify for a reverse mortgage loan.
“Once the lender has determined that the borrower is eligible, they work closely with them to shape the loan so it fits their needs,” says Paul Fiore, Chief Sales Officer for American Advisors Group, the leading reverse mortgage lender in the nation. “At AAG, this is a highly personalized process designed to give the borrower the best outcome for their financial situation.”
Once qualified, borrowers are referred to reverse mortgage counseling, an important consumer safeguard mandated by the government. During counseling, a HUD-approved HECM counselor reviews the borrower’s needs and circumstances. They consider how the funds might best be distributed, the financial and tax implications, and whether a HECM is right for them. If so, an application is submitted to the lender.
Next, the property will be appraised, and after that the approval process will begin. Before closing on the loan, borrowers will choose between several loan disbursement options, from taking it all out in a lump sum, receiving fixed monthly payments, opening a line of credit or any combination.
After the closing papers are signed, the homeowner has three business days to change their mind and cancel the loan (except if the loan is being used to purchase a new home). After the rescission period has passed, the funds are ready to be paid out through the payment option selected, subject to an initial disbursement limit that is determined by HUD.
5. Using your loan
The loan servicer will generally disburse funds via direct deposit or mail on the first business day of the month, following the funding of the loan. The borrower can live in the home as long as they like without making monthly mortgage payments, as long as they continue to pay property taxes and insurance on the home, maintain it in good condition and comply with any other loan terms.
6. Settling your loan
If the last surviving borrower sells or transfers the property, passes away, or does not use the property as a principal residence for more than 12 months, the loan has reached a “maturity event,” meaning that the loan comes due and no further funds can be disbursed. Borrowers also have the option of paying off their loan in full at any time without penalty.
Following a maturity event, an appraisal will be ordered by the loan servicer to determine the property’s current market value. The heirs can sell the property to repay the loan, or purchase the property for 95 percent of its appraised value. Since HECMs are non-recourse loans, the proceeds from the sale of the home are the only asset that can be taken to pay the loan’s balance, even if the loan amount exceeds the value of the home.
A home equity conversion mortgage can be shaped to fit an individual’s needs. With new consumer safeguards in place, many seniors are discovering that it is an important part of their retirement strategy.
Whether you’re considering ways to give to deserving causes or looking for the perfect gift for a loved one for a special occasion, remember that not every gift is a tangible item. In fact, some of the best gifts are those you can’t touch at all, but those that make the world a better place. Consider these giving options to make a lasting impact.
Make a Lasting Difference
(Family Features) Whether you’re considering ways to give to deserving causes or looking for the perfect gift for a loved one for a special occasion, remember that not every gift is a tangible item. In fact, some of the best gifts are those you can’t touch at all, but those that make the world a better place.
Socially motivated gifts, of your own accord or on behalf of someone else, are much more than a one-time present. They have the potential to make a significant impact on lives or to further the work of a cause-based organization.
Consider these giving options to make a lasting impact:
Retirement plans: Because retirement plans are taxed differently than most assets, they may actually become a tax liability. Naming a nonprofit organization as a beneficiary of your retirement account can be an attractive option for leaving a legacy and reducing income, and possibly estate taxes, for loved ones. A tax-exempt organization may be eligible to receive the full amount, bypassing income taxes. This means, for example, that a $100,000 IRA can be worth the full $100,000.
Life insurance plans: A gift of life insurance is an affordable way to make a significant gift while also enjoying tax savings during your lifetime. Benefits include the ability to give a significant gift at a fraction of the value; tax savings that can be immediately realized; a reduction in the final taxes of your estate and the ability to pass gifts outside of your estate.
Gifts of real estate: You may decide that the greatest gift you can make is to leave your home or other property to a charitable organization. This kind of gift is ideal for someone who intends to continue living in his or her home or property through their lifetime, but still make a charitable gift. You can leave this generous gift by signing an agreement with an organization about maintaining the property so you can use it throughout your lifetime. You may even receive a tax deduction for your gift.
Gifts of stock: Stocks, bonds and mutual funds that have appreciated in value are among the best ways to gift a nonprofit organization. You may receive a charitable income tax deduction for the full market value of the stock (up to a maximum of 30 percent of your adjusted gross income) and avoid paying the capital gains tax on any increase in the value of the stock.
Gifts of cash: This type of gift is simple and eligible for an immediate charitable tax credit. Although many organizations allow you to specify how you would like the funds to be used, an unrestricted monetary donation allows the organization to allocate your contribution into the project or area that needs funds most.
If you designate a gift on someone’s behalf, be sure to share a card or a note with the honoree letting them know about the contribution. Particularly if it’s a cause close to the heart, it’s sure to be just as gratefully received, if not more so, as any trinket you might buy.
Find more ideas for gifts that make a lasting difference at eLivingToday.com.
4 Ways to Make an Impact on Children
When looking for opportunities to make an impact on the lives of others, selecting a cause to support can be an overwhelming task with so many options to choose from. However, considering opportunities that can change the lives of kids is one way to make a lasting impact for generations to come.
Helping children early on can change the trajectory of their lives, set them up for success and empower them to achieve their dreams. This is especially important for kids living in poverty who are not guaranteed access to things like medical care and quality educations. According to global humanitarian organization Children International, nearly half the world lives on less than $2.50 a day and 1 in 5 kids in the United States lives in poverty.
Consider these ideas to make an impact on children in need now and well into the future:
Become a mentor or coach. A positive role model can make a life-changing difference for a child from disadvantaged circumstances. As a mentor or a coach, you can help children explore and nurture their unique talents and guide them toward a successful future.
Volunteer at a local school. Families increasingly rely on two incomes to support their households, which means parents are less available to lend their time to their children’s classrooms or schools. At the same time, public school funding is shrinking. As a volunteer, you can help fill these gaps and contribute to bettering the learning opportunities for children in your community.
Sponsor a child. You may be surprised to learn how far a monetary donation can go. For example, Children International supporters can join a monthly giving program and sponsor a child in poverty for $32 per month. Your donation establishes a connection with an individual child who receives access to life-changing benefits like medical care, educational support and life-skills training. The institution is a CharityWatch top-rated organization that serves 250,000 children in 10 countries. If a reoccurring donation is not right for you, the organization also accepts one-time donations. Learn more at children.org.
Donate new or used items. Service organizations such as shelters generally operate on tight budgets and rely on contributions from the community. Gently used items in good condition such as children’s clothing of all sizes and warm bedding are generally welcome.
Photo courtesy of Getty Images (Young boy and Grandmother)SOURCE:
(BPT) - By now it is something of a cliche to call homeownership the American dream. But even if sitting on your own deck, looking over your picket fence and sipping lemonade doesn’t move you, homeownership is still one of the best ways to build wealth.
For many, owning a home is cheaper than renting and, in the long run, the biggest investment they will ever make. It is also a practical financial move thanks to the fact that you're likely building equity while getting a mortgage interest tax break.
So although it is perfectly fine to dream about backyard barbecues and the smell of fresh-cut grass, the path to owning your own home should also involve taking the time to do some financial sightseeing.
As a leader in creating credit scoring models, VantageScore Solutions has made it a priority to educate consumers on the important role a good credit history plays in buying a home.
Whether you’re about to set out to buy your first home or if you are getting ready to sell and buy another home, here are the basics of how credit impacts the home-buying process.
If you are like most people, you will probably need to take out a loan. If you are able to pay cash for your home instead, count yourself among the lucky few!
A huge part of taking out a loan involves your credit history and credit score. Basically, you must prove to lenders that you can be a responsible borrower and can be trusted with a mortgage of many thousands of dollars. A strong credit score may provide proof of this trustworthiness.
Different types of loans have different credit requirements. Some loans require you to have a credit score of at least 620, although it is possible (with some difficulty) to be approved for a loan with a credit score as low as 580. But getting loan approval is only part of the story.
Better credit, better rate
Home loans come in all shapes and sizes. Some are fixed interest mortgages, some have adjustable rates or longer terms and the list of variables goes on. Just like anything else, some loans are better for you than others. To get the loan that has the lowest interest rate, which right now is around 4 percent, usually requires a higher credit score. Rates can be considerably higher when you have a lower credit score, and the result is paying significantly more monthly over the life of the loan.
The reason is that a higher credit score demonstrates that you are skilled at managing debt and have a history of responsibly paying back many types of loans. Therefore, the lender is taking on less risk when lending you money. The less risk for them, the better the interest rate for you.
While there are, of course, more nuances to the process, your credit score plays an instrumental role in determining the type of loan you may qualify for. Therefore, before you go to your first open house, check your credit score to better understand the factors that typically impact your scores. Many websites provide free access to your VantageScore, which is a perfectly fine barometer to use to directionally gauge your creditworthiness. Mortgage lenders use FICO scores in their underwriting.
You can stay on top of things by subscribing to the monthly credit scoring newsletter, The Score. In The Score, you can find information on VantageScore 4.0, the fourth-generation scoring model that will be available to consumers in early 2018.
Knowing your credit history and understanding the factors that could impact your credit score will help you plan, budget and come up with a realistic wish list for your house.
Are millennials getting ready to leave big cities in droves? Some experts in demographics, economics and real estate have predicted the millennial exodus from huge urban areas has already begun. If true, the question remains: where will they go? Some may head to the suburbs, like their parents and grandparents did before them, but many will look for a different lifestyle, one that combines the advantages of suburban living with the best features of city life. Some smaller metro areas, like Wausau, Wisconsin, are banking they have the blend of economic opportunity, urban elements, affordability and lifestyle that will attract migrating millennials.
“Economy has always been a factor in generational migrations, and while the nature of work has changed, economic opportunity is still key to where people want to live,” says Christian Schock, director of planning, community and economic development for the City of Wausau. “Everyone wants to find a place with the winning formula of urban activities, affordability and lifestyle. Businesses want to put down roots in that environment, too, knowing it will draw a bigger pool of skilled workers.”
In recent years, the City of Wausau has made concerted efforts to position itself with both big city amenities and small town assets. By many accounts, the efforts are paying off. In a 2016 Pew Research Trust analysis of income equality nationwide, Wausau ranked first in the nation, with the middle class constituting 67 percent of the city’s total population. Wausau also ranked highest in Wisconsin and eighth nationally on Area Development magazine’s list of hot spots for new and expanding businesses.
Small to mid-size metro areas that want to attract millennials, as well as businesses and investors, need to address key areas, including:
In addition to the recreational and entertainment amenities often highlighted when discussing millennials, many mid-sized metros lack the diversity of housing types that can be found in a larger city which millennials might be accustomed to.
One strategy Wausau has focused on specifically is diversifying housing product. The City funded local architects to design an urban rowhouse — a housing style which did not previously exist. For over a decade, leaders proactively assembled parcels for new riverfront apartments, and continually worked with developers to seek tax credits which could be applied to renovating historic properties into unique multifamily offerings.
Rising real estate costs are among the factors that kept many millennials living in cities longer than they might have liked, experts say. Mid-sized metros have an edge in making home buying more affordable for millennials — and homebuyers of all generations.
Recognized as a leader in economic development homesteading, Wausau's Live It Up program is a partnership between local employers and the city to provide employees with a no-interest down payment assistance loan for the purchase of a home. In the last two years, the program has allocated more than $200,000 in no-interest loans to local employees.
Millennials who came of age in urban environments have a strong affinity for multifunctional spaces, and are drawn to communities that are a walkable mix of business, retail, industry and residential. While the specific physical space needs may change, their own strong sense of identity makes them inclined to seek a region that has its own established sense of self.
Wausau has leveraged more than $100 million in new downtown development over the past decade and currently has another $100 million under construction, emphasizing the city’s identity as a vibrant, growing core. Wausau’s Riverlife Village project is reclaiming more than 16 acres of urban waterfront along the Wisconsin River to house a new park, river wharf, mixed-use office space, biking paths, apartments and a family entertainment center.
Perhaps the greatest testament to a mid-sized metro’s success is the recommitment of historic businesses to local growth. Wausau Insurance was an early innovator in workers’ compensation insurance, which evolved out of the necessity for local lumber mills to share the risk of worker rehabilitation. Now part of Liberty Mutual, the company recently announced a $50 million regional facility expansion. Wausau Window and Wall Systems and Linetec, both in the building materials industry, also trace their roots to the lumber industry, and have completed over $60 million worth of expansion and doubled the size of their workforce within the past five years, providing a strong foundation for continued economic development.
“Any resident, millennial or not, is looking for ways to connect with their community. Both businesses and residents are discovering that smaller cities can even be more responsive and creative than larger metros,” says Robert Mielke, mayor of Wausau.
To learn more about how the City of Wausau is attracting residents from big cities, visit www.wausome.org.
(BPT) - Buying a home for the first time is comparable to the first time you ride a bike. You can learn about how it works from your parents and observe it from a distance, but you really won’t know the ins and outs until you actually sit down on the bicycle and start riding.
Like most beginners, first-time homebuyers will likely make a few mistakes as they initially go through the home-buying process in the upcoming year. Here are five mistakes first-time homebuyers often make, and how to best avoid them.
1. Waiting too long to make an offer
One of the biggest mistakes first-time homebuyers will make in 2017 is simply waiting too long to get into the real estate market, according to Jay Carr, a senior loan advisor for RPM Mortgage in Newport Beach, California. Because the rates look like they’re going to continually increase over the year, it’s important for buyers to get in as early as they can so that they can avoid paying more later on. If you see a home that you’re interested in and you have been thinking about entering into the market for some time, don’t hesitate too long.
2. Trying too hard to get less than the asking price
Many first-time buyers are younger, tech-savvy and are comfortable researching homes on their own. Overall, these are positive traits in a buyer. However, because these buyers are typically self-sufficient when it comes to other purchases, they often think they know best when it comes to what price they want to offer.
“Buyers rely too much on what they see on the internet instead of the good advice of what they would hear from a real estate agent,” Carr says.
Of course sometimes it pays off to be bold in an offer (in that you get to pay a lot less than the asking price), but often it can end up that the buyers are negotiating themselves out of a deal. It’s important to pay attention to your real estate agent, who is a seasoned professional, when it comes to putting in an offer so you don’t offend the seller and lose the house you want.
3. Not exploring all your financing options
Carr says many first-time buyers have grown up thinking that they need to save up for a 20 percent down payment before they can enter the housing market. While it is always great to have as much money to put down as possible before you purchase a home, it’s important to consider many of the new options available today.
One option is a home ownership investment such as the Unison HomeBuyer program, which typically provides up to half of the down payment you need. The money is an investment in the home, not a loan, so there are no interest charges or monthly payments. This new type of financing — which works in combination with a traditional 30-year mortgage — can offer greater flexibility and control to the home buyer. It allows you to cut the time needed to save for a down payment in half, lower your monthly payments and avoid mortgage insurance, or increase your purchasing power so you can buy the home you want.
4. Wanting the dream house right away
Everyone has a picture in their minds of what their first home will look like. Whether you envisioned a craftsman bungalow near all your favorite bars and restaurants or a classic ranch-style home with tons of land and no neighbors, chances are you’re going to have to trade up to that dream home from your first starter home.
“If you really like the house, you probably can’t afford it. If you think the house is just kind of below what you want it’s probably right in your price range. Get in the market rather than wait to get the dream house,” Carr says.
Carr advises those in the hunt for their dream home to focus on becoming homeowners now and to wait on their dream home until they have built up equity and have higher incomes in the future.
The median tenure of a homeowner in 2017 is about 10 years, but for the 20-year period before that it was only six. Believing that this won’t be your last house can take a bit of pressure off the home being perfectly suited for you.
5. Not having your own representation
Another mistake a first-time homebuyer can make is not having their own representation (meaning that they use the seller’s agent as their own buyer’s agent). While this is not always a bad situation, Carr cautions buyers to be careful that they have selected a good and trustworthy real estate agent that is looking after their best interests. In other words, you don’t want to pay an unfair price because someone is looking after their own best interest.
To learn more about the Unison HomeBuyer program and how it could help you, visit www.unison.com/homebuyer.
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