You’ve probably overheard homeowners boast that they nabbed a “great interest rate” on their mortgage. But what is interest, exactly?
Essentially, interest is an extra fee you pay your lender for loaning you the money you need to buy a home. Lenders, after all, don’t just fork over their money out of the goodness of their hearts.
“They want to be compensated for putting money in your pocket,” says Jack Guttentag, author of “The Mortgage Encyclopedia.” Since mortgage lenders are providing cash upfront to make homeownership possible, they require you to repay the debt plus interest.
Now, if you’ve got a lot of dough lying around and want to pay for the whole house upfront with an all-cash offer, you can avoid paying interest. But let’s face it, most of us aren’t living in this dreamy scenario, which makes home loans and interest par for the course—so it pays, literally, to know how it all works.
How interest rates on home loans workWhen you get a mortgage, your interest payment is calculated as a percentage of the total loan amount. For example, say you get a 30-year $200,000 loan with a 4% interest rate. Over 30 years, you would end up paying back not only that $200,000, but an extra $143,739 in interest.
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Sign UpMonth to month in the above scenario, your mortgage payments would amount to about $955 per month. Part of that monthly payment would go toward paying back what you borrowed (an amount known as your principal), and the rest goes toward interest.
The exact proportion varies month to month—early on, homeowners typically pay more interest and less principal—but that composition changes as the loan matures. For instance, in your very first month for the above scenario, you’d pay $288 to your principal and $676 to interest. By your last check to your lender 30 years later, you’d pay $951 toward principal and $3 toward interest (check out realtor.com®‘s mortgage calculator to punch in your own numbers).
So what does this payment schedule mean for homeowners? It means it will take time for you to build equity in your home, since you’re largely paying interest during the early years. Yet there’s an upside to this reality: Interest on a home loan is deductible on your taxes, so early on you will get a big tax break that dwindles as your equity rises.
Why interest rates fluctuateFluctuations are based on several factors.
“During a period of slack economic activity, [the Federal Reserve] will provide more funding and interest rates will go down,” says Guttentag. Conversely, “when the economy heats up and there’s a fear of inflation, [the Fed] will restrict funding and interest rates will go up.”
These financial shifts could be stressful if they affected your monthly mortgage payments, but luckily when you get a home loan, there’s a way to shield yourself from this roller coaster by getting a fixed-rate mortgage, which locks in your rate at whatever level it is at the time you apply. It remains the same over the life of your loan (typically 30 years). Or else, if you don’t mind the market’s ups and downs, you can opt for an adjustable-rate mortgage.
How to get a low-interest loanNot everyone who applies for a home loan gets the same interest rate. It varies widely depending on a variety of factors.
Probably the biggest variable is you: Interest rates for home loans vary depending on the borrower’s credit score. Good credit leads to lower interest rates, which is why it’s important to know your credit score and keep it stellar.
Your interest rate can also vary based the type of loan you get: 15-year loans, for example, typically offer lower interest rates than 30-year loans. ARMs have lower interest rates than fixed-rate mortgages (at least at first).
The bottom line: Paying interest may be a reality to homeownership, but how much interest you pay runs a wide gamut, so make sure you grasp the basics before you apply.
Be The Maintenance Man
Offer your services to the other cottage owners on the lake. Basic maintenance such as cutting the grass, weeding the garden, cutting firewood or painting the tool shed are all things that need to be done, but require time that people living in the city just don’t have. This is a great option for a cottage handyman who enjoys doing this type of work.
Cottage opening and closing services are also always in demand.
Be A Guide
Tourists and cottage renters all need help. Whether it’s locating the fishing holes, navigating the hidden reefs and islands, hiking the local trails or evaluating a property, there is always demand for a local expert to provide assistance. If you have owned your cottage for a number of years, you may be the perfect person for the job.
Write A Book
If you have a talent for writing but never had the time to start your novel, the cottage is the place to make it happen. You never know unless you try. Self-publishing and online publishing have made it possible for every writer to make his or her work available to the world. Many best sellers start out this way.
Make Cottage Handicrafts
The cottage is the perfect place to be creative. Woodworking, quilting and creating handicrafts are all fantastic options for unleashing your inner artist. The money earned by selling artwork at the local market during the cottage season may cover the costs of retirement living at the lake. You will also meet a lot of interesting people and may discover that your creations are in high demand.
Become A Cottage Bed And Breakfast
If you love to entertain and you are looking for a way to finance an early retirement at the cottage, why not set yourself up as a cottage B&B. It takes a lot of careful planning and consideration, but it may be the most rewarding decision you will ever make.
Create A Website And Cottage Blog
Running a website or writing a blog about your favourite hobby is the perfect activity for working from the cottage. By the end of the first season you could have a following of loyal readers and companies may be willing to pay you for ad positions.
Work As An Online Consultant
You have built up an expertise in a particular field, and now it’s time to set up a consulting service and run it from the cottage using video conferencing. Schedule meetings to work around your fishing time.
Trade Stocks Or Currencies
This one should only be undertaken by people who are already familiar with stock trading or currency trading. If the stock markets or currency markets are your passion, trading from the lake is much more comfortable than sitting in an office in the city.
Star A Cottage Delivery Service
Start a delivery service for other cottage owners. This could be for groceries, fishing supplies or even transporting guests and renters from the mainland to an island cabin.
Sell Real Estate
Become a real estate agent for your lake. The best cottage real estate agents are always people who actually live in the same area they are selling. You probably know your cottage community very well. Now you can use this expertise to help other people buy or sell cabins nearby.
Working from the cottage may require a leap of faith and a reduction in income, but if we are determined, we can figure it out and enjoy the life we have always dreamed of.
Go to the Leisure Activities page.
Go to the Cottage Trader article to get some information on how to start trading stocks from the cabin.
Buying a house in 2017 will feel kind of like you’ve jumped onto the subway just as the doors were closing. Your heart’s pounding and you’re winded from the race, but you made it—just in time.
OK, so maybe that’s a little exaggerated. But here’s the thing: Interest rates have begun to rise and will likely climb higher. Inventory is low and could shrink more. And home prices? Well, home prices are increasing—and they’re not predicted to fall any time soon.
If you don’t jump aboard the real estate train now, you might be too late.
And that’s not a smart gamble, our real estate experts say. If you’ve been toying with the idea of buying, or you anticipate a life change that might force you to move—such as a new baby or a job transfer—you should be “buying as urgently and as soon as possible,” Smoke says.
Find homes for sale on
So finish reading this, then start looking for a house. Here’s why.
1. Rates are rising
In 1981, when mortgage rates hit 18% and seemed to rise every day, single-digit rates seemed like an impossible dream.
Last August, however, rates on 30-year mortgages bottomed out at 3.55%. Now that the Federal Reserve finally decided to raise its key interest rate, mortgage rates have been climbing slowly. Today, the average rate is just above 4%; by 2019 or 2020, rates could easily climb to 6%. “All signs point to this trend continuing,” says Richard DeNapoli, managing director for Coral Gables Trust and a former Florida real estate commissioner.
Before you freak out, take heart: Rising rates aren’t necessarily a deal breaker for buyers. The National Association of Realtors® calculated that a rise from 4.2% to 5% would increase average monthly mortgage payments by $90—not nothing, but not a catastrophe, either. And if you take the long view, those higher rates are still historically low.
“For buyers there still is opportunity,” says Danielle Hale, managing director of housing research for the NAR. “For those who are still able to get into the market, these low rates continue to be helpful.”
Another upside: When rates go up, competition and prices often go down.
“I’d tell buyers not to panic, because higher mortgage rates eventually cause sellers to be more flexible on pricing,” DeNapoli says.
2. Inventory is shrinking
In November 2016, there were only 1.85 million homes for sale. That’s a nearly 10% drop from the year before. And it continues a trend of steady decline since just before the housing crash, when inventory peaked.
Real estate experts predict that inventory will continue to shrink, at least for the foreseeable future. That means that in most areas of the country, buyers have more homes to choose from today than they will next year.
Or even next month. If you get moving now (during the winter, which is largely considered to be real estate’s off-season), you’ll have less competition for those homes than you will in the peak spring and summer months.
Bottom line: Every day you wait to start looking for a new home, you face stiffer competition for fewer homes.
“If you think it’s bad right now, wait until April to August,” Smoke says.
3. Home prices are still rising
The bad news for buyers is that home prices now stand higher than before the 2007 crash, increasing 5% from 2015 to 2016. And housing experts expect an additional 2% to 3% jump in 2017, DeNapoli says.
“Prices continue to go up; we have yet to see that ceiling,” says Trevor Levin, a real estate agent with Nourmand & Associates in Los Angeles. “I think they have room to grow.”
How high prices will rise and how long they’ll remain high is anyone’s guess. Rising mortgage rates and the new Trump administration have introduced “uncertainty” into the real estate market, Levin says.
“And uncertainty is never ideal,” he says.
The good news? If you jump into the market pronto, you just might make it before those doors close.
As a residential housing developer, I felt like I could do it all—visualize a project, stand for hours on permitting lines, then run all the crews needed to build the house. But I was hiding a secret: If you put me in a room filled with backsplash tiles, or threw a book of paint chips in my lap, I froze. Interior design is simply not my thing.
So for each project, I hired an interior designer who made the choices I couldn’t. Together, we’d mix and match, discuss the pros and cons, and eventually select the elements that made my projects beautiful and unique, IMHO.
But finding the right designer for you can be daunting, especially when there are so many to choose from. (About 68,000 interior designers work in the U.S., according to the American Society of Interior Designers, or ASID.) In fact, finding a great designer involves as much alchemy as legwork.
Do it yourself, also known as DIY, is the method of building, modifying, or repairing things without the direct aid of experts or professionals. Academic research describes DIY as behaviors where "individuals engage raw and semi-raw materials and component parts to produce, transform, or reconstruct material possessions, including those drawn from the natural environment (e.g. landscaping)". DIY behavior can be triggered by various motivations previously categorized as marketplace motivations (economic benefits, lack of product availability, lack of product quality, need for customization), and identity enhancement (craftsmanship, empowerment, community seeking, uniqueness)
The term "do-it-yourself" has been associated with consumers since at least 1912 primarily in the domain of home improvement and maintenance activities. The phrase "do it yourself" had come into common usage (in standard English) by the 1950s, in reference to the emergence of a trend of people undertaking home improvement and various other small craft and construction projects as both a creative-recreational and cost-saving activity.
Subsequently, the term DIY has taken on a broader meaning that covers a wide range of skill sets. DIY is associated with the international alternative rock, punk rock, and indie rock music scenes; indymedia networks, pirate radio stations, and the zine community. In this context, DIY is related to the Arts and Crafts movement, in that it offers an alternative to modern consumer culture's emphasis on relying on others to satisfy needs and organize without the need of a handyman. The abbreviation DIY is also widely used in the military as a way to teach commanders or other types of units to take responsibility, so that they'd be able to do things themselves just as a preparation for their own future.
Everyone wants to do work that is meaningful. But what does “meaningful work” mean?
Here’s one take from author Adam Smiley Poswolsky: “Meaningful work is about finding alignment between your unique gifts and the impact you want to have, in a way that supports your desired quality of life. That might mean starting your own business, or it may mean aligning your personal mission with an organization’s mission,” Poswolsky writes.
“Any job, however unfulfilling to you, might be incredibly meaningful to someone else,” he adds. “Don’t worry about whether your job or company is more meaningful than someone else’s — this is a fool’s errand — instead, discover what’s meaningful to you. Not what’s meaningful to your friends on Facebook, your parents, or your boss, but what’s meaningful to you.”
Conscious Lifestyle magazine offers an insightful list of things to keep in mind as you make your way toward that all-important determination, noting that “like anything in life, with the right knowledge and tools, anyone can be empowered to accomplish whatever it is they set their mind to.”
That’s a notion that Habitat for Humanity certainly embraces in our work, and here, the opportunities for doing meaningful work are plentiful. Each role with Habitat, whether paid or volunteer, is a way to help more families build and improve a place to call home. And that brings us all closer to our shared goal of a world where everyone has a decent place to live!
1. Make Sure It’s for You
Do you know your way around a toolbox? How are you at repairing drywall? Or unclogging a toilet? Sure, you could call somebody to do it for you, but that will eat into your profits. Property owners who have one or two homes often do their own repairs to save money. If you’re not a “get your hands dirty” type and you don't have lots of spare cash, being a landlord may not be right for you. (See Becoming a Landlord: More Trouble Than It's Worth? for more insights.)
Your first property will take a lot of your time as you learn the ins and outs of being a landlord. Think of it as another part-time job. Do you have the time?
2. Pay Down Debt First
Savvy investors might carry debt as part of their investment portfolio, but the average person probably shouldn’t. If you have student loans, unpaid medical bills or your triplets will soon attend college, purchasing a rental property may not be the right move..
3. Got the Down Payment?
Investment properties generally require a larger down payment than an owner-occupied building and have more stringent approval requirements. The 3% you put down on the home you currently live in isn’t going to work for an investment property. How much will you need? At least 20%, given that mortgage insurance isn’t available on rental properties.
4. Beware of Higher Interest RatesThe cost of borrowing money might be cheap right now, but the interest rate on an investment property will be higher. Remember, you need a mortgage payment that’s low enough so that it won’t eat too heavily into your monthly profits.
Read more: Buying Your First Investment Property? Top 10 Tips | Investopedia http://www.investopedia.com/articles/investing/090815/buying-your-first-investment-property-top-10-tips.asp#ixzz4a651hvLe
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....will the trend continue this year??
FLORIDA HOME SALES END 2016 AS THEY STARTED – UP!
Despite inventory squeeze, sales rise 0.8% .Higher median prices and fewer all-cash sales marked Florida's housing market in December, according to data released by Florida Realtors® Tuesday. Sales of single-family homes statewide totaled 22,332 last month, up 0.8% from December 2015.
"The trend of tight housing supply continued to have an impact on Florida's housing market in December," said 2017 Florida Realtors President Maria Wells, broker-owner with Lifestyle Realty Group in Stuart. "Last month, statewide median sales prices for both single-family homes and townhouse-condo properties rose year-over-year for 61 months in row. While that's good news for sellers, it's continuing to put pressure on inventory for first-time home buyers and those who may be looking for their next 'move-up' home.
Vow No. 1: Get realistic about how much your home is worth
People vow to do all kinds of things—hit the gym, get more sleep, quit Froot Loops—and if you plan to sell your home this year, making a few promises matter here most of all. After all, selling your home for top dollar takes work and the right mindset to strike a deal.
To help make that happen, we put together a list of good habits all home sellers should start now so that you’re fully prepared once opportunity knocks.
It’s natural to think your home is priceless, or hope it’s worth at least more than when you bought it. As such, many sellers make the epic mistake of placing a pie-in-the-sky price on their home with the hopes that some buyer somewhere will bite. But the reality is, overpriced homes tend to languish on the market.