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Things to Consider

Non-rate reasons for refinancing your mortgage

When it comes to the very latest in residential real estate events, stories that tend to make the news are usually related to asking prices, and the availability of homes for first-time or move-up buyers. But another newsmaker is the state of interest rates, which fell rather sharply in 2018.

The general rule of thumb is if you can lower your interest rate by 0.5% or more, refinancing is worthwhile by virtue of helping you save potentially thousands of dollars over the life of the loan. However, a low-interest rate environment is not the sole reason why refinancing can be a smart move. Here are a few other reasons why it can be worth the time and effort:

Reduce the loan's term

Generally speaking, there are two options you can choose from when it comes to how long you intend to pay off your home loan: 15 and 30 years. Overwhelmingly, the most common choice is 30 years. However, with the economy in bull territory, salaries increasing, job availability outnumbering those looking for work and the national unemployment rate as low as it's been in over half a century, you may be in a better position to pay more per on a per-month basis. The upshot here is, you'll be able to pay off the entirety of the loan more quickly and ultimately pay less than you would with a 30-year mortgage.

You can find out exactly how much you stand to spend per month by changing to a 15-year term length - and how much you'll save - with a mortgage calculator.

Switch from FRM to ARM

Just as you typically have two choices of terms, you also have dual options for the type of interest rate: Fixed Rate Mortgage (FRM) or Adjustable Rate Mortgage (ARM). Fixed is the most common choice because it provides borrowers with the predictability they need to make the appropriate adjustment with their budget and how much they can expect to spend.

However, depending on how long you've owned your residence, your circumstances may have changed, making an adjustable-rate mortgage a better option. For example, if you're thinking about moving in a few years - which you may not have considered when you first applied for a  mortgage - an ARM may be a wiser option, in part because rates at the outset may be lower than they are with fixed.

Alternatively, if you no longer plan on relocating, switching to fixed with rates where they are now can help keep your monthly payments in historically low territory so you never have to worry about the impact rising rates will  have on your wallet when - not if - they do climb. 

Tap into home equity

It's said that real estate is one of the best investments you can make. This is largely due to the direction of home prices, as they've risen consistently on a year-over-year basis for 92 months in a row, according to the most recent figures available from the National Association of Realtors. Similarly, home equity levels have also surged. In the third quarter of 2018, over 54 million homes were equity-rich, according to estimates from ATTOM Data Solutions. That's the equivalent of more than 1 in 4 homeowners. Meanwhile, just 3.5 million mortgages were underwater.

Tapping into the equity your home has built up can provide you with more options when it comes to decisions that cost money. For example, if you want to refurbish your kitchen, bathroom or dining room, cashing out can supply you with the funds necessary to pay for the equipment and labor involved. You may also want to use the proceeds to purchase a business or make a down payment on an investment property. All this can be done by refinancing.

Forego mortgage insurance

Many people are under the assumption that they have to make a 20% down payment in order to buy a house. In reality, you can buy a house with as little as 3.5% down, and if you're a veteran or active duty member of the military, or purchase in a designated area, you may not need a down payment at all.

Perhaps the main reason why this 20% down requirement myth has persisted is due to mortgage insurance. If you put down less than 20% of the house's listed price, mortgage insurance is generally required so the lender can be made whole if the borrower defaults.

If you're someone that currently has mortgage insurance and you want to avoid paying the premiums associated with keeping the policy current, you may be able to eliminate it by refinancing into a conventional mortgage. Since more properties these days are equity-rich, you may have the 20% equity that is necessary to waive mortgage insurance. 

There's a caveat

As you can see, the reasons why refinancing can make a lot of sense aside from taking advantage of historically low mortgage rates run the gamut. However, just because a variety of other scenarios exist does not necessarily mean that you should - or will even be able to.

Whether you should or not depends on your goals first and foremost. If you don't know or they're still a work in progress, avoid refinancing until you're sure of the path forward. You may want to speak with a financial advisor for some direction. A loan officer may also be able to help you to chart out a strategy for real estate investing decisions.

The other thing to be mindful of is refinancing qualification. Refinancing a mortgage is just like a purchase mortgage, in that you need to have the appropriate qualifications in order to be eligible. Some of the things your lender will look at are your income, your loan-to-value ratio, credit history and FICO® score. Talk to your lender about the documentation necessary to refinance. Much of the material you'll need is similar to what's required in order to pre-qualify.

Talk to your lender for more news and information on refinancing and whether you're in a situation that makes you an ideal candidate.


Things to Consider

Buying a house next year

Buying a house next year? Here's how to prepare:

The years seem to be flying by with increasing speed, and it's safe to say that 2019 was no different. Did you get everything done you wanted? What do you plan on doing in the new year? If buying a house is on your 2020 to-do list, now's the time to prepare.

Years may be measured in months, hours, minutes and seconds, but they're also measured in moments, and 2019 was a rather momentous one within the housing market. While home prices continued to rise on a year-over-year basis - for more than 90 straight months now, according to the National Association of Realtors - builders made some solid gains in improving supply levels throughout much of the country. This results in price increases slowing down, which allows buyers - many of whom are earning appreciably more thanks to steadily rising incomes - a chance to catch up.

Plus, with housing starts jumping nearly 14% in October, based on estimates from the National Association of Builders, remarkable growth in inventory could make 2020 the first year in quite some time that asking prices slide. In short, if you're on a budget, next year just may be the perfect time to start seriously looking for a house, whether it's your very first or likely the last.

How do you prepare now so you're ready later? Here are a few suggestions:

Attend open houses

Even though actually making an offer on a home may not happen for several more months, think about attending open houses you see advertised. Pictures and descriptions in online listings are great, but they don't give you the full story on what a house looks and feels like. Take some time to go to as many as possible so you can get a sense of what homes or condominiums are selling for. These visits can also provide added context on the exterior and interior housing features you'd like in your soon-to-be home and those that are turn-offs.

Get your finances in order

If you do anything in the next several months to prepare, make it this one. Once you gain pre-approval for a mortgage, you'll have the flexibility and understanding of how much you can afford to spend, which can help you narrow down your search. But in order to obtain such a letter, your lender will need to assess how you're doing financially. Depending on how imminently you plan on entering the market, try to avoid any major purchases if you can. Also, see if you can raise your credit score by paying off bills prior to their due date and keeping any credit card balances low.

Write your representative or senator

As the NAHB points out, there's no silver bullet to housing affordability. Lowering asking prices will take a united effort, from the consumer public, the business community as well as the government. One way of going about this is by lawmakers reducing red tape. Did you know that 25% of the cost for housing construction is attributable to regulatory requirements? To make it cheaper for builders to develop, Congress will need to act. Send a letter to your representative, urging them to support legislation that helps to lower the cost of development. The savings may be passed on to you.

Write a persuasive letter

Bidding wars can be stressful and they typically end in favor of the one who offers the most money. That's not always the case, though. You may want to think about writing a letter that explains why you're the right person for a house. Sellers do take more into account than dollar signs when evaluating offers. Your letter just may win them over.

Happy New Year and best of luck in all your homeownership endeavors in the days and months ahead!

Things to Consider

How to start investing in real estate - image of a toy house on a lawn

Instead of working for your money, wouldn't it be great if your money worked for you?

It can when you start investing.

From precious metals to mutual funds, high-yield savings accounts to treasury securities, there are lots of potential options. Whichever you choose, one overarching rule is key: Invest in what appreciates - it can build net worth.

This is one of the main reasons why a number of financial experts consider buying real estate to be a smart decision. The numbers don't lie. For instance, in July - the most recent month for which complete data is available - the median existing-home price in the U.S. was $269,300, according to the National Association of Realtors. Not only was this total up more than 4% from the previous year, but it represented the 89th consecutive month of year-over-year growth.

Whether it's something done on the side or a potential career pursuit, the amount of time and money you devote to investing in real estate is up to you.

Before we get into the specifics, it's helpful to understand the types of real estate investments that are available. As you might imagine, investment property options are endless.

House icon with the word 'sale' inside it

This is perhaps the most basic launch point for entering the real estate market and something that nearly two-thirds of Americans can stake claim to, according to the most recent figures available from the Census Bureau.

Financial experts often suggest that before buying investment properties, you should start out small by paying off your home. If nothing else, doing so provides a certain sense of comfort, control and security for your family, knowing they will always have a place to call home.

However, should you decide to sell - perhaps when the kids move out or upon retirement - you should be able to make back what you spent; the dollar amount can vary considerably depending on market conditions and supply and demand.

House icon with an upward arrow inside

Rental properties
To rent or to buy? Whether freshly out of college or in between jobs, renting is a living option that millions of people choose because it makes the most sense for them financially. This fact is one of the main reasons why many real estate investors choose rental properties. Instead of renting property for themselves to live in, they purchase the investment property to rent out to other individuals or families.

There are several different roles rental property owners can assume. Perhaps the most basic is landlord.

Renters pay the monthly rate and in return receive shelter. But a landlord's role typically goes above and beyond providing tenants with a place to stay. They often also take care of the ongoing maintenance and repair needs that may develop, such as a leaky faucet, broken window or clogged drain. They may also pay for certain utilities as part of the rental agreement with the landlord. In short, the amount of time rental investment property owners devote to this type of real estate can be considerable and may not be the best choice for those looking for a short-term investment vehicle.

High rise building icon with an upward arrow pointing to a dollar sign

Office buildings
Much like a homeowner or renter, businesses need a place to reside and they often find them in office buildings. Commercial real estate is geared toward entrepreneurs or general companies that rent out space for business purposes. Office buildings are typically found in major metropolitan areas, but they can also be located in suburban or rural communities.

Similar to residential landlords, office building property owners are charged with addressing various maintenance and incidentals that companies may run into from time to time, whether they're relatively simple or complicated and costly.

Because office units tend to be larger than residential apartment units, the rental prices are generally higher. And with more space typically comes more responsibility. Furthermore, if you own an office in a high-rise development where other businesses are located, you may be required to abide by certain policies dictated by the state or whomever owns the building itself.

Two house icons with arrows moving between them

House flipping

If you ever watch the DIY Channel or HGTV, then you probably have a good idea of what house flipping is all about. These types of investment properties may be in a state of disrepair when they're first purchased. The buyer commits to renovating the place and then "flips" it to another buyer who may want to use it to live in or as a vacation property. The goal of house flipping is to turn a profit by creating more value than what was spent on the initial purchase and renovations.

Home flipping is quite popular nowadays. According to the most recent figures available from ATTOM Data Solutions, an estimated 59,876 single-family units and condominiums were flipped between April and June. That's an increase of 12.4% from the first quarter. On a percentage basis, this means that of all the homes sold during this period in the U.S., close to 6% were flips.

Those who rehabbed them wound up making a profit, grossing an average $62,700, ATTOM Data Solutions found.

That said, it's important to understand that those who flip houses don't always make money. The cost of renovation may be more than originally estimated or market fluctuations may cause the price of the house to drop below what was spent to buy it in its original form. Financial experts as a result may not point to house flipping as a vehicle for investing in real estate.  

Icon of a group of people watching a presentation of a house with a dollar sign

Short for real estate investment trusts, REITs are structured arrangements, wherein a company or companies pool their money to buy properties and then sell off some of their assets as shares. Similar to mutual funds, investors who buy in typically receive a portion of the money that REITs earn, the amount of which typically depends on their stake or how many shares they purchase.

Investment advisors questioned about how to start investing in real estate may point to REITs as a good launching point, because it enables people to work with those who are already in the real estate market.  Additionally REITs may come tax free, provided the income earned goes to shareholders as dividends, as noted by

As with virtually all investments, there are some risks with REITs. Their value may decline depending on economic and real estate market forces. Additionally, you may not have authority to make further investment decisions with the property, especially if it is privately held (as opposed to publicly traded). 

Icon of a person with three houses

House hacking
Here's a term you may not be too familiar with, though it is pretty straightforward. It basically means that you live in one of the investment properties you buy, typically multi-family units (e.g. apartments, condominiums, etc.). However, instead of the traditional arrangement, where you pay off the cost of living there, your tenants do it for you.

This may be a sound investment strategy for those who are looking to invest on a short-term basis or are skilled in house flipping. As noted by, the benefits of house hacking include improving cash flow and building your investment portfolio, meaning that it can be a smart area to get your feet wet.

Icon of a small shop

Online shopping has revolutionized how Americans buy products and services. With just a few keystrokes and button clicks, goods are shipped straight to consumers' doors. However, brick-and-mortar shopping remains the most common form, which is why retail remains a popular real estate investment. From convenience stores to outdoor strip malls to big-box department facilities, there are over 1 million retail establishments in the U.S. at the present time, according to the National Retail Federation. And of the 50 top-selling online retailers, close to 100% of them have brick-and-mortar locations.

Much like apartment unit or office building landlords, they also serve in retail property capacities and are charged with the same maintenance-related responsibilities, although the nature or frequency of these tasks may be different. For example, because retail locations host potentially tens of thousands of people in a given week - and millions in a year - repair issues may be more common than at an office building that sees the same number of people from week to week.

Another difference may be in how retail property investment owners are compensated by the companies renting them out. As The Balance noted, in addition to a base rent, they may also be paid on a percentage-of-sales basis, as the retailer may have the added advantage of the property being highly visible or in a busy part of the city or town. In some cases, greater customer traffic may lead to better sales compared to a location that's hidden or out of view. 

Believe it or not, that's just the beginning when real estate investment opportunities, as warehouses, mixed-use, industrial and vacation properties are a few others. So when you're considering how to start investing in real estate, your first task is determining which one to choose. No one can answer that question but you, although you may want to talk with a trusted financial advisor for further guidance.


Here are some additional pointers for how to start investing in real estate and what's important to keep in mind:

Infographic on how to start investing. Each point can be found below.Get a handle on your finances
As previously stated, every investment contains some level of risk. The key is to reduce as much of it as possible so surprises aren't too jarring.

The best way to ensure that is by smart money management. According to data compiled by The Wall Street Journal, consumer debt reached over $4 trillion in 2019, which doesn't include mortgages. There's nothing necessarily wrong with having debt, but before investing in something as big as real estate, you should  know how you'll pay debt off. Whether that's by refinancing interest rates, saving more or increasing cash flow by working a second job, being financially stable is key to smart real estate investing.

Reflect on why you want to invest in real estate to begin with. Is it to generate some additional cash flow as a second job? Is it to raise money to help put your soon-to-be high school graduate through college? Or is this something that you see yourself doing for the long term because you've always had an interest in it? Whatever it is, be as specific as possible about what you'd like to get out of buying real estate. It can help you determine how much time and money you'd like to put in.

Start out small
A common mistake that many people make upon entering the real estate market is biting off more than they can chew. This is a potentially highly lucrative investment when you get it right, so it can be really exciting to begin big. It's best, however, to take it slow by first paying off your house. Once you've done that, talk to friends, co-workers or loved ones who have real estate investments. You're almost guaranteed to find that they too started out slowly by first buying a share in a REIT or a single apartment unit. As you build income and experience, you can then decide if you want to take things a bit further.

Read, read and read some more
There are hundreds and hundreds of resources on real estate investing, so many that you may have a hard time deciding which ones to choose. In this case, the more you read, the better off and more informed you're likely to be. If you're not sure where to begin, consider speaking with a real estate agent or a real estate investor. They should be able to list off some books that were helpful for them.

Do your homework

Although this may sound similar to the tip about reading as much as you can, doing your research is slightly different. Real estate is a highly fluid medium. What may be the norm in one geographical region may be different in another, particularly with prices. As mentioned earlier, the goal in real estate investing is to place your money in properties that appreciate. This may be a function of where you live. In July 2019, for example, the median price for an existing home in the Northeast was $305,800 - well above the national median, according to NAR data. In the Midwest during the same month, the price was $226,300.

The price difference is partially attributable to the amount of people that live in these respective parts of the country as well as availability of houses to sell. Regardless of where you live, do your research into price trends for single-family or multi-family units, which you should be able to find at websites like the National Association of Realtors or the National Association of Home Builders. It can give you some added confidence and understanding of the direction of prices and in what types of houses (e.g. condominiums, townhouses, single-family, multi-family, etc.).

Run the numbers
In addition to the purchase price of the property itself, there are other costs, such as property taxes, homeowners insurance, mortgage insurance (if you're putting less than 20% down as a down payment) and maintenance-related expenses, which can be unpredictable. Make out a list of the costs involved. Then, pair it with what you'd earn monthly from tenants' monthly rent payments. If the profit outweighs your costs, you're golden.

When you do it right and you come prepared, investing in real estate may be the smartest move you'll ever make. And it can be quite rewarding to boot. If you feel like you're ready to get started, then jump on in - the water's fine.

Things to Consider

An autumnal wreath on a door

The Benefits to Buying in Autumn

Most homebuyers think that the best time to purchase a home is in the Spring when lawns are green, trees have leaves, and flower beds are in bloom. Did you know that house hunting in the Fall comes with is own great set of benefits? Buyers will avoid the competition that comes with busy real estate seasons and could even have opportunities to save money if they shop in Autumn!

There is Less Competition:

One of the biggest reasons to buy a home in the Fall is because it is considered off season for real estate so there is less competition between buyers. According to RealtyTrace, over the past 15 years, October buyers paid on average 2.6% lower than estimated market value. With less buyers putting offers on homes in the Fall, it leaves more room for negotiation on price.

Tax Advantages:

If you close on your new home before the end of the year, you may be able to get a tax deduction next April. In addition, many sellers want to close by December 31st so they can take advantage of a tax break, which means that they may be more willing to cut a deal.

End of the Year Sales:

Fall is a great time to buy appliances and furnishings for your new home because of Black Friday and end of year sales.

The Focus is on You:

Since business is slower in the Fall months, Real Estate Agents, Loan Officers, Home Inspectors, etc. have more time on their hands to dedicate to helping you find and purchase your perfect home.


Don’t let the lack of green outside, shorter days, and gloomy weather stop you from finding your dream home. You will avoid competition and have some money saving opportunities while house hunting in Autumn.

Things to Consider

3 houses on growing stacks of coins

Should you invest in real estate?

Financial experts don't agree on everything, but one thing they share common ground on is the reliability of real estate as an investment.

Since 2012, home prices have risen with each passing month, according to the National Association of Realtors. Within days of hitting the market, for-sale properties across the country are snatched up in short order, as demand continues to far outpace supply. Depending on your available resources and financial goals, investment properties can help supplement your income or become a full-time occupation.

If real estate is something that you've always found interesting, you may be wondering where you begin. In other words, how do you start investing in real estate or go about buying your first investment property. You may also be curious about what you should know before you fully enter the real estate market and the extent to which you'd like to be involved. This should help you answer some of these questions.

What do real estate investors do?

As their title implies, residential real estate investors use financial resources in order to build, optimize, maintain or otherwise manage property that people use for dwelling purposes. Everyone needs a place to put their things and kick back from life’s daily stresses, and polls show buying a home is something the vast majority of Americans hope to do. The ongoing desirability of homeownership has led more people to start investing in various types of real estate. Fun fact: According to NAR data, 23 percent of the home sales in February 2019, the most recent month for which data is available, were cash sales.

Just how involved real estate investors become in the process is for them to decide. For example, those who wish to supplement their income, may opt to buy shares in a real estate investment trust, or REIT.

Similar to mutual funds, REITs function as organizations that maintain various types of real estate, whether it be commercial (like offices in high rise buildings, residential (townhomes, single-family units) or those used for accommodation purposes (like hotels). REITs can be a good starting point for buying real estate because there's usually less responsibility involved, particularly if the REIT is a public one.

A much more involved form of real estate investing is buying houses to resell them, typically after implementing necessary renovations. Better known as house flipping, this can be a potentially lucrative way to turn a profit and is something that an increasing number of properties have been the product of. For example, in 2018, more than 207,950 single-family homes and condominiums were flipped, according to ATTOM Data Solutions. They accounted for roughly 5 percent of all real estate transaction over the 12-month period.

Getting a higher price on a flipped home is made possible by renovating properties, which can increase their resale value. However, it’s important to do your homework before investing in a fixer-upper so you know how much it will cost to make the necessary improvements. Whether you do the repairs yourself or hire someone to do them, you want to avoid spending more on the renovations than the potential increase in appraised value. 

The labor-intensive elements of home flipping - both in research and physical work - is part of the reason why experts recommend it only for those who have the amount of time and available resources to make the commitment.

Is it a good time to invest in real estate?

Former Speaker of the House of Representatives Tip O'Neill used to say that all politics is local. In other words, goings-on in terms of activities, events or circumstances are subject to change, depending on the place you're talking about. The same can be said for real estate. Asking prices, home buying interest and inventory in one portion of the country might be different from the next.

Generally speaking, though, few can deny that it's a great time to be buying real estate, if for no other reason than climbing home values and the pace at which people enter the marketplace. Indeed, in February, existing-home sales rose 12 percent from the previous month, based on the latest NAR data. Additionally, the median price among all housing types - single-family, townhome and condo - rose 3.6 percent on a year-over-year basis to $249,500. February 2019 was the 84th month in a row that home values rose from the same period a year earlier.

What's more, in a separate NAR study, more than 50 percent of those surveyed said they considered the current real estate market to be worthy of entering in order to buy a home. This was due, in part, to a strong economy, 53 percent of whom thought it was continuing to improve through
the first three months of 2019.

But just because there's ongoing consumer interest in buying homes doesn't necessarily mean it's a no-brainer investment. Here are a few key considerations before you make the decision:

Do your homework

Whether you buy property as an investment vehicle is a determination you should only make after doing your research. There are lots of online resources you can go to that provide tips on cost-benefit analysis, but things you can do on your own time include actually visiting the property that's up for sale, what other homes in the area sell for and your financial capabilities.

You may want to meet with a financial advisor or mortgage provider who can go over some of the numbers with you to give you an idea of whether or not you're a good candidate and have the necessary cash flow or ability to make a down payment on an investor mortgage (usually 20 percent of the purchase price).

Start out small

At the outset, avoid buying a house that will require a lot of renovation if you plan on rehabbing it yourself. Starting small will allow you to get your feet wet and determine if investment property work is something you wish to pursue long-term.

Pay off debt

Debt is always something you should try to avoid, but if you require an investment loan, you may be required to be free of any outstanding debt, such as medical bills or unpaid tuition bills. Prioritizing your finances and credit score can improve your odds of mortgage approval.

Real estate is a road worth traveling that's paved with endless possibilities. Through planning, research and smart money management, it just may be the super highway to a future of wealth and prosperity.

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