Houston home sales continued to rise last month as record highs were recorded in both average and median home sales. The average home price rose to $283,697 and the median, and which half the homes sold for more, and half for less, rose to $214,000. Continued low mortgage rates in Houston, Spring, The Woodlands, Cypress, Tomball and Conroe aided the climb. Inventories also climbed to 2.9 months from a low of 2.6 months in April but still below the national average of 5.5 months. The average days it took for the average home to sell hit a record low of 46 days. Housing sales rose 4.5% in June and this strength in the local market echoes the momentum seen nationwide as home sales rose 2.6%.
While some potential homebuyers remain on the sidelines waiting for prices to come down. This is unlikely in the near to intermediate term as fundamentals in the local area are driving demand and a lack of new construction during the recession has contributed to an inventory problem that will likely take years to correct. The best strategy is to get pre-approved and take advantage of the higher inventory of homes for sale in the summer months and the continued low mortgage rates that experts believe will begin to rise later in the year.
A small home office need not necessarily be furnished with small office furniture. When choosing furniture when space is limited, you should first make a list of the essential items you must have, then a list of what it would be good to be able to accommodate. Keep in mind that most home offices in the USA are small rooms, and only the professional home business owners have better.
First check your equipment. Use a laptop rather than a cabinet PC. Laptops are just as powerful as case computers these days, and take up a lot less room. Even if you prefer a larger monitor, a decent desk should be able to accommodate your laptop and a good-sized monitor. Use a 3-in-1 printer, including a printer, copier and scanner all in the one machine.
When choosing office furniture for a small home office, all you should now require are:
The Small Home Office Desk and Chair
Even a small home office should be able to accommodate a good sized desk. Make sure you have a cupboard and drawers for immediate supplies such as paper and other items. Your desk will accommodate a router and telephone, so you will need only a small table or stand for your printer.
The chair is an essential item of office furniture. Choose a chair that is comfortable to sit in. Swivel chairs are generally best for an office, and they are available in many styles and covers from genuine leather to vinyl and a range of fabrics. If you purchase online, make sure it is adjustable in height and tilt, though it always best to try furniture out before buying it.
Home Office Furniture: Shelving
If you have the space for a bookcase then get one, but if not then use shelving on your walls. Shelves are always handy items of office funiture, even if your books are limited. They are useful for spare printer paper and ink cartridges, diaries, CD or DVD cases and so on. A rack of shelves makes much better use of space, and enables you to use the height of your home office, not just the floor space.
Integrated Wall Units
Some small home office spaces are ideal for integrated wall units. You can use the full height of the room and all the wall space to incorporate shelving, cupboards, drawers and desk space. The only space you need leave is room for the door to open! You can find a massive selection of modern wall units online that are suitable for a small home office. Choosing office furniture never got easier.
You can select pieces of home office furniture to suit your room dimensions, and mix and match to fit in with your storage needs. There are many collections of home office wall units comprising built-in desks, cupboard and drawer units, display shelving, file cabinets and drawers and printer cabinets. They all fit together just as you need them.
Choosing office furniture for a small office is no longer a difficult chore. You can approach it in two ways. Either go for the traditional individual desk and storage units, or take the integrated approach and build up your small home office from the walls outwards and upwards. This will increase the value of your home, though both should enable you to accommodate the equipment you need.
Many of our readers in Houston, Spring, The Woodlands, Tomball, Conroe and Cypress ask us where interest rates are headed over the next several months. While no one has a crystal ball, we did want to share what some experts are saying on the subject. You can follow our daily rate lock guidance by liking our Facebook page. If you or someone you know are interested in getting pre-approved for a mortgage, please give us a call at (832) 286-1601.
“In the next few months, mortgage rates are likely to remain at their current, low level, but will not remain there for long. As the Federal Reserve is expected to ‘taper’ its purchases of long-term Treasuries and mortgage-backed securities, and as economic growth picks up, long-term yields will gradually rise. Fixed-rate mortgages are expected to be higher in six months, and may even approach 5 percent a year from now.”
“Mortgage rates could move suddenly higher in anticipation of rate increases, much as they did last summer when refinance and transaction activity was high. Steady purchase transaction volume and lower refinance volume could mean that mortgages rates may adjust in a more gradual fashion. In either case, as the economy improves—and today’s data clearly suggests it is improving—the overall trend for mortgage rates is up, not down.”
What is amortization? How does it work? Many people have asked these questions and have been offered complex answers that have left them even more confused than before they asked. Here is as simple an explanation as you are likely to get, particularly with reference to mortgage amortization
Mortgage Amortization Fundamentals
When you take a loan of any sort, you want to repay the same amount every month. There are loans where you can start paying less and end up paying a lot more, but most people like to make the same monthly payment every month over the term of the loan – whether that is a car loan, personal cash loan or a mortgage loan.
The interest on your loan can be arranged in a number of ways. It can be charged daily, weekly, bimonthly or monthly according to the agreement you signed. Most mortgages apply the interest monthly in advance. Let’s say you have a loan of $150,000 over 30 years at 4% interest.
Annual Mortgage Amortization
If we start the calculation on the first day of the month, then:
On day 1 of year 1 you are due 4% of $150,000 = $6,000 interest, plus your principal repayment: $150,000/30 = $5,000. That makes $11,000 mortgage payment due for year 1. Obviously you could likely not pay that in addition to your down payment and closing costs.
If it is agreed that you make equal monthly payments for year 1, then that would be $916.67 each month for the first year. That might be more affordable. The following year would then be calculated assuming you only owed $145,000 ($150,000 – $5,000). You would then pay less that year since your interest would be less, but you would still make the same annual $5,000 payment off the principal.
Amortizing a Mortgage Monthly
Take that to a monthly basis: each month your principal payment would be $5,000/12 = $416.67 and your interest would be based upon the principal still owed at the start of that month.
What this means is that your initial payments would be high, because you are paying interest on the full amount still owed. Interest would become increasingly lower as the year progressed because the principal would be getting less. Your payments later into your 30 years would be much lower, because your total sum would be less, and so the interest charged at the beginning of each month would less.
What is Mortgage Amortization Today?
What is amortization in terms of today’s mortgages? Let’s take the above examples to the extreme. Take:
Total reducing monthly interest paid over 30 years + total monthly principal payments due after each month
Divide that total 30 year figure by 360 to come to an average monthly payment. That’s how mortgage amortization works. Amortization is a system that calculates your total payments over the 30 years, and divides them by 360, so you make the same payment each month. You pay exactly the same monthly mortgage payment for the full 360 months.
What is Amortization?
Let’s come back to the original question, ‘what is amortization?’ Amortization of any loan, including mortgage amortization, is a financial tool that enables borrowers to repay their loan at the same amount every month. Without it, you would pay considerable more at the start of your mortgage term and less at the end – the opposite of what would likely be ideal for you.
Paying off your mortgage early can ease your mind from worries of foreclosure or increasing mortgage rates. Increasing numbers of people are doing this, and relaxing in the knowledge they not only have no mortgage, but also own the entire equity in their home. It’s something to think about, but can you pay yours early?
Most people are unable to make a cash payment to clear their debt. However, there are steps they can take to reduce the time they will take to clear off their mortgage loan. Here are some ways of paying your mortgage early without actually paying off your loan balance in cash
Paying Your Mortgage Early: Pay More Principal
If you increase your monthly payment you can make sure the extra comes off the principal you owe. The way amortization works is that even if you make a single lump sum payment, each normal monthly payment you make after that will be paying less to the interest and more to the principal.
If you can’t afford a lump sum, then add something to your monthly payment. If you are paying $575/month, increase that to $580 or even $600. Your mortgage will then be paid off several months or more early. Obviously, the more you pay extra, the faster your mortgage will be cleared. However, even if you just pay these extra sums now and again, it will still make a big difference.
Switch to Biweekly Payments
Biweekly payments are a popular way of clearing your mortgage early. There are 12 months and 52 weeks in each year. 26 biweekly payments come to 13 monthly payments each year, and not just 12. Your lender will take your biweekly payments, and apply them at the end of each month. You will be paying slightly more each month, amounting to a full month by the end of a year. By the simple task of making this extra payment each year, you can reduce your repayment period for a 30-year mortgage by as much as 6 years!
Your bank or lender should be able to accommodate you with that. Some will accede to your request free of charge while others will charge you a fee. You should make sure that your bank applies the extra payment to your principal. As the principal reduces faster, so your interest reduces faster than normal each month. Even more of your regular payments then go towards the principal.
Refinancing to a Lower Term
If you are now earning more than when you set your mortgage up, you may be able to refinance it. By refinancing a 30-year mortgage to 15 or 20 years you will be making higher payments but you will also be clearing your mortgage early.
An even better way is to arrange your mortgage over 30 years, but repay it as if it were over 15 or 20 years. Alternatively start paying more as you earn more. Pay 50% of your increase to your mortgage and spend the rest. The only time this doesn’t work is if your mortgage interest rate is significantly less than you could earn by investing the cash. Don’t forget that by reducing the principal you are also reducing your interest payments into the future. A direct comparison of mortgage and investment interest rates is therefore not valid.
Clearing your mortgage early is a good way to increase your equity at a faster than normal rate. It is also a good way to invest your spare cash. The less you owe on your mortgage, the less interest you are paying, so the more goes into paying off the principal – you gain all ways. It is also good to clear your mortgage before your retirement, and these steps could ensure that. However, take good financial advice before committing yourself. A mortgage adviser can offer advice tailored to your personal circumstances.
You have likely heard of people with mortgage difficulties. What if you can’t pay your mortgage – what can you do?” Where can you turn to for help to avoid foreclosure and losing your home? As the 2008 mortgage crisis taught us, that could be any of us with that very same problem. So what is the answer? What can you do if you can’t pay your mortgage?
Did 2008 Teach Us Lessons?
If you have mortgage difficulties there are certain things you can do to prevent you losing your home. It happened to vast numbers from 2008 onward through little fault of their own. They were not to blame for being offered mortgages they could not afford, and certainly not for the irresponsible trading of sub prime mortgage derivatives on the stock market that brought the problem to the attention of the general public.
Five years on and it is slightly easier for those with mortgage difficulties. Thankfully, both lenders and the government have learned some lessons from the sub prime derivative crash. If any good can come from such a harrowing time for many people this is one example. Here is what you can do if you have mortgage difficulties or even if you just can’t pay your mortgage:
Don’t Ignore the Letters
Read the letters! It’s difficult to watch the post coming into your mailbox and seeing these envelopes knowing what they might contain. You must not ignore them, but open the letters and respond to them. Don’t hide them in cupboards or drawers – they won’t go away. Write back or call your mortgage lender and state your financial situation. You may be surprised by the help they are willing to offer.
You will likely be asked for a financial statement. Be honest with your total income and expenditure, including all your debts. They won’t be forgotten, but you may be able to come to an affordable mortgage repayment schedule. Your lender might rearrange your mortgage to offer you a lower interest rate or longer repayment period – each of these will reduce your monthly payments to a more affordable amount.
Federal Help with Mortgage Difficulties
Check out the HUD website and contact a HUD counselor. This is a free service, and you will be given the best advice possible for your specific situation. There are several ways in which your situation can be resolved and improved so you can keep your home with affordable repayments.
What you must not do is to leave your home. Abandoning your home will not help, and may ruin any possibility of you getting help from your lender or the government. One government program, ‘Hope for Homeowners,’ offers 30-year fixed rate mortgages. You will only get this type of help if you are still living in your own property.
Home Affordable Foreclosure Alternatives Program
Another program if you have mortgage difficulties is known as Making Home Affordable. This helps you to refinance your mortgage and makes it easier for you to pay. However, if you are really in deep trouble then the Home Affordable Foreclosure Alternatives Program can help.
You won’t be able to save your home, but if you are interested in a Deed In Lieu of Foreclosure or even a short sale then it can help. Each of these enables you to clear your debt to the mortgage lender in return for your home. You benefit by not having a foreclosure on your credit record, and usually having your mortgage debt paid off.
If you have mortgage difficulties and can’t pay your mortgage, then you should consider one or more of the above options. Each situation is different and what suits another person might not be best for you. Seek independent advice for the solution that best meets your needs.
Kitchen flooring used to be a simple choice: linoleum or tiles. Now you have a much wider choice of flooring materials for your kitchen. The choice you make can make a difference to the value of your home, particularly if you intend selling in the near future. Here are some ideas for materials suitable for your kitchen floor.
Kitchen Flooring Ideas: Wood
Wooden floors are popular in many homes, and are frequently enhanced by the use of area or accent rugs. However, rugs are not recommended for use in kitchens for hygiene and safety reasons. Nevertheless, many still prefer large expanses of solid wood flooring to any other floor covering. It is particularly popular in homes where the kitchen and living areas share an open plan design.
Hardwood floors look good when finished with wax or oil to provide a glowing but waterproof finish – though not ideal for kitchen flooring. Such finishes require regular cleaning and treatment to maintain the finish. A more durable surface for kitchen flooring can be obtained by using a polyurethane varnish on the wood. PU cures to a very hard and resilient surface that is easily cleaned.
The type of wood flooring available today is more durable than the old style boards of the past. Harwood blocks coated with PU varnish will last 5-6 years before needing another coat of varnish. The surface can be kept clean with an ordinary floor mop and is resistant to everyday spills, oils, hot fats and most other kitchen spillages. Popular hardwoods include cherry, maple, oak and hickory – the latter being particularly hardwearing.
Cork Flooring for Kitchens
Cork might appear to be an unlikely material for a kitchen floor, but it is preferred by a lot of people. Cork is warm to the touch, and great if you like walking barefoot in your home. It can be finished in a number of colors and varnishes. It is also a very handy surface if you drop a glass or valuable plate.
Many believe that cork would easily be dented, but nothing is further from the truth. Unlike wood, where a dent is permanent, cork quickly reverts to its original smoothness when deformed. It is also extremely resistant to water spillages.
Brick and Ceramic Tiles
Many people love using ceramic tiles in their kitchen. These are not like the small glazed tiles you would use in a bathroom. Kitchen tiles are larger and specifically designed to be anti-slip. They are available in a wide selection of patterns and colors and are easy to mop. Ceramic kitchen tiles are beautiful and add a touch of class and a Mediterranean look to your kitchen.
An alternative to regular ceramics is brick. Rather than use standard building bricks, kitchen bricks are a thinner version that have the durability and look of aged brick and easy to lay. If you like the idea of a brick floor in your kitchen, pavers are available in a wide range of finishes and shades. They are very durable, almost indestructible and very easy to wash clean. Perfect for a ceramic kitchen floor!
Rubber Kitchen Flooring
Professional chefs have been using rubber kitchen flooring for many years. It helps reduce breakages to a minimum, is warm to walk on and is very easy to keep clean. It is also a very easy surface on the feet and legs which is why the pros like it. Even though they are made from recycled tires, rubber flooring is available in a huge choice of colors. You can buy them like vinyl – in tile form or in rolls for easy laying over large areas.
These are just some of the alternative forms of kitchen flooring that are available today. We have still to mention concrete, bamboo and vinyl, but if you choose any of those above you are sure to have fabulous kitchen flooring that is easy to keep clean and is very durable. Most are available in colors and designs to suit any kitchen and will certainly help your home to improve in value over the years and maintain your home equity.
There are several ways of financing home improvements. However, before you even begin thinking of home improvement loans you should have a budget and try to stick to it. Keep in mind that most people go over-budget with a home improvement project, so add about 20% or more for your final costs.
Here are the common ways of financing home improvements;
Financing Home Improvements: Home Equity Loan
A home equity line of credit is probably better for financing home improvements that a straight reverse mortgage. Also known as a HELOC, a line of credit enables you to borrow as you need during the draw period up to your credit limit. For home improvements, a short draw period would be sufficient, typically 5 years. Arrange enough to cover over-budget costs – you need not use it but the facility is there if you do.
You pay interest only on what you draw from the line of credit, so you can purchase home improvement materials as you require them, or pay contractors as the bills come in. A HELOC is repaid in full at the end of the period, or can be amortized for the full amount over the draw period. There will be a minimum monthly payment to cover at least the interest, and you can pay as much as you like above that.
If you are aged 62 or over, a HUD Home Equity Conversion Mortgage (HECM) might suit you better and the costs are less. You can also get a line of credit with this. It should be noted that with equity loans you will be unable to use all of the equity in your home.
Title 1 Home Improvement Loans
In the title 1 program, private lenders are insured by the FHA to provide home improvement loans. These are for up to $25,000 and a maximum period of 20 years. You can use the funds for genuine home improvements, but not luxuries such as spas, saunas and hot tubs. The interest rates tend to be around 50% of those of a private home improvement loan. You need not have equity in your home, but you must apply to a lender approved to offer a Title 1 loan.
Personal loans offer lower interest rates than credit cards. Traditional banks tend to charge high interest rates for personal rates, but if you go online you can find a selection of lenders offering such loans at much lower rates.
Loans from Contractors
If you have some form of security, such as the equity in your home, some contractors will help with financing home improvements. If you take this route, make sure that the rates are lower than with a regular lender because many contractors get reward by lenders for passing your inquiry on.
Energy Efficiency Tax Credits
The government offers tax credits to a maximum total of $500 for installing energy efficient equipment in your home. This is not much, but it is something. Some credits can be higher if you upgrade to Energy Star equipment. Some states also contribute to the equipment costs. Check online for what your state offers – you may be in luck.
These are the more common methods of getting help financing home improvements. Always check the interest rates and costs of home improvement loans and go for the cheapest without putting your home at risk.
The HECM reverse mortgage is a means of using the cash that is tied up in the equity of your home. It is offered by HUD and the FHA. Before we go any further, it should be stressed that these are loans like most others and involve fees in setting them up and also monthly repayments that must be maintained. However, they are a reasonably good way to release equity without having to sell your home.
Qualifying For an HECM Reverse Mortgage
Correctly known as the Home Equity Conversion Mortgage, the HECM reverse mortgage is good alternative to the reverse equity mortgages offered by commercial lenders, and is very popular way to release equity due to their affordability. They are specifically for seniors, and their qualification includes:
• You must have equity on your home (owe less on your mortgage than its value.)
• You must be aged 62 years or more.
• Your home must be a singly family, or 2-4 unit home, condo or FHA-approved manufactured home.
• The property must be your principal residence.
• You must not be behind in payments on any federal debt.
• You must have undergone counseling on what a reverse mortgage entails.
How Much Equity Can you Release?
The amount of equity you can borrow depends on several factors:
• The age of the youngest borrower – must be at least 62 years.
• Current interest rate.
• $625,000, the sales price or the appraised value whichever is the least.
• Whether you choose an HECM Standard or Saver (see below.)
You will not be permitted to release all of your equity. How much will vary according to the individual. This is to ensure that once the property is sold or remortgaged, there is sufficient equity to leave a reasonable amount for your heirs.
You can repay the loan using one of 5 different payment plans. The best for you will depend on your personal circumstances, and will be explained on application. Fundamentally they involve:
• A straight repayment of the same amount each month for a fixed term, just like your mortgage,
• Tenure: a monthly repayment as long as one borrower lives
• A line of credit, or
• A combination of line of credit and each of fixed period or tenure payments.
The HECM Saver is designed for those wishing to release a smaller amount of equity and pay less closing costs. The Mortgage Insurance Premium (MIP) is normally 2% of amount loaned. The MIP for a Saver is only 0.1%. With $200,000 equity released, this equates to an MIP of $4,000 for the regular HECM and $200 for the Saver HECM. However, the interest rate on the saver is higher.
The vast majority of equity over the last few years has involved one of the two HECM programs. You are not obliged to use the HECM reverse mortgage, and if you are unhappy with any of the conditions then you can apply for a private equity release with a private lender. However, it will cost more if you release equity privately and you should take some professional advice before making a decision.
Mike Lesmeister, Branch Manager of CORE Lending’s Houston office has earned the Five Star Professional Award for Mortgage Professionals for 2014. This recognition is reserved for less then 7% of the licensed mortgage professionals within the Houston metro area which includes Spring, The Woodlands, Tomball, Cypress, Conroe and Humble, TX. This is the third consecutive year Lesmeister has earned with award. Five Star Professional uses a complex research methodology that includes surveys on closed real estate transactions and consultations with areas real estate professionals top determine who earns the designation. “I am very proud of the hard work that my team has done to earn this award again. It is a testament to our approach and living up to the promises we make to our clients and business partners.”, Lesmeister said upon hearing the news. Lesmeister also credits the support provided by his company and a process that caters to purchase transactions. Mr. Lesmeister has more than 20 years of mortgage and financial services experience and is among the less than 1% of licensed mortgage professionals nationwide to have earned both the Certified Residential Mortgage Specialist (CRMS®) and Certified Mortgage Planning Specialist (CMPS®) credentials. He also holds a B.A. from Wake Forest University and an M.S. from Oklahoma State University. A complete list of winners can be viewed in the June issue of Texas Monthlyor by visiting Five Star Professional.