If you can afford it, it might be simple to pay off your mortgage earlier. But should you? That’s a complicated question.
Homeowners with low mortgage rates may be better off putting extra money in a Roth IRA or 401(k), both of which might offer a higher return than paying off the mortgage.
Then there’s the college aid factor. If you’re applying for need-based aid for your kids, that home equity could count against you with some colleges because some institutions view equity as money in the bank.
If, after those caveats, you want to pay off your mortgage early, here are four ways to make it happen.
Refinance with a shorter-term mortgage. You can pay off the mortgage in another 15 years by refinancing into a 15-year mortgage.
Let’s say you got a 30-year fixed-rate mortgage for $200,000 at 4.5 percent. Then, five years later, you can refinance into a 15-year loan at 4 percent. Doing so pays off the mortgage 10 years earlier and saves more than $60,000 (if you exclude closing costs on the refi).
Those shorter-term mortgages often carry interest rates a quarter of a percentage point to three-quarters of a percentage point lower than their 30-year counterparts.
Refinancing isn’t quick or free. It requires filling out the application, providing documentation and having an appraiser visit. There are closing costs.
And even with a lower interest rate, that quicker payoff means higher monthly payments. And this method is a lot less flexible. If you decide that you don’t have the extra money one month to put toward the mortgage, you’re locked in anyway.
Unless the new interest rate is lower than the old rate, there’s no point in refinancing. Without a lower rate, you’ll get all the same benefits (and none of the extra costs) by just increasing your payment a sufficient amount.
Pay a little more each month. Divide your monthly principal and interest by 12 and add that amount to your monthly payment for a year. Result: You make the equivalent of 13 payments in 12 months.
Let’s say you got a $200,000 mortgage at 4.5 percent. After five years of making the minimum payments, you add an extra 1/12 of a month’s principal and interest to each monthly payment. Doing so pays off the mortgage three years and three months earlier and saves more than $18,000 interest.
Before you make anything beyond the regular payment, call your mortgage servicer and find out exactly what you need to do so that your extra payments will be correctly applied to your loan.
Let them know you want to pay “more aggressively” and ask the best ways to do that.
Some servicers may require a note with the extra money or directions on the notation line of the check.
In any event, if you’re putting extra money toward your loan, always check the next statement to make sure it’s been properly applied.
Make an extra mortgage payment every year. Instead of paying a little more each month, make one extra monthly payment each year. One way to do this is to save 1/12 of a payment every month, and then make an extra payment after every 12 months. This gives you the flexibility to use the extra savings for something else if a more pressing expense arises.
Let’s say you do this starting the first month after getting a 30-year mortgage for $200,000 at 4.5 percent. That would save more than $27,000 interest, and you would pay off the mortgage four years and three months earlier.
Throw ‘found’ money at the mortgage. Get a bonus? A tax refund? An unexpected windfall? However it ends up in your hands, you can funnel some or all of your newfound money toward your mortgage.
Let’s say you got a 30-year, fixed-rate mortgage for $200,000 at 4.5 percent. Then, five years later, you can make an extra $10,000 lump-sum payment. Doing so pays off the mortgage two years and four months earlier, and saves more than $19,000 in interest.
The upside: You’re paying extra only when you’re flush. And those additional payments toward the principal will cut the total interest on your loan.
The downside: It’s irregular, so it’s hard to predict the mortgage payoff date. If you throw too much at the mortgage, you won’t have money for other needs.
GFCI and AFCI are specialized electrical safety devices with very different purposes. Let's take a look at how each is used in the home as well as how they work.
A GFCI, or ground fault circuit interrupter, is an inexpensive device that is designed to protect people from electrical shock in the home. GFCI receptacles should be installed in any area with potential risk for electrical shot with a direct path to the ground, especially areas with plumbing. These are commonly installed in bathrooms, along kitchen counters, in garages, unfinished basements, outdoor outlets and near swimming pools and spas. A GFCI monitors the electrical current leaving from and returning to the receptacle, which should be the same. If there is a mismatch in the currents, the GFCI will shut off the receptacle immediately, protecting people from serious electrical shock.
GFCIs have various configurations, including the standard GFCI receptacle with "test" and "reset" buttons. Homeowners should test these monthly to ensure proper operation. If the GFCI fails to trip or can't be reset, it should be replaced. There are also remote GFCIs, which protect standard receptacles in the circuit. These should always have a visible label indicating GFCI protection, because there is no way to tell just by looking that it is or isn't protected. Another option is a GFCI breaker, which is installed at the electrical panel and protects the entire circuit. These can be identified by the presence of test and reset buttons.
An arc fault circuit interrupter, or AFCI, is designed to prevent electrical fires in the home. This is a relatively new type of circuit breaker that detects arcing in an electrical circuit, shutting down the affected circuit before it causes a fire. Arcing can be caused if an electrical cable is punctured or cut by something as simple as hammering a nail into a wall. Other potential causes of arcing include frayed extension cords, loose electrical connections, and old and/or cracked insulation on electrical wires and cables.
An AFCI breaker fits into the electrical panel in place of a standard circuit breaker. AFCI breakers are much larger than standard breakers and have a test button. They may not be available for older electrical panels, so retrofitting with AFCI breakers is not always possible. In addition, old wiring may have been subjected to years of poorly-executed modifications, which AFCIs may or may not compensate for. It is always best to check with a qualified electrician who can assess your panel and electrical components before making the decision to install AFCI breakers.
USDA's Upfront and Annual Fees are Getting Smaller...
This is good for first time home buyers:
Effective with RD Conditional Commitments dated 10-1-16 and beyond, the upfront fee is being reduced from 2.75% to 1.0% and the annual fee is being reduced from .5% to .35%.
This is GREAT news Rural Development for borrowers! This means they will borrow less up front, and pay less in monthly mortgage insurance premiums! This change takes effect for RD Conditional Commitments (RD Approvals) issued on/after 10-1-16!
News You Can Use - Are you ready for spring/summer?
Are you ready for spring & summer?
Now is a great time to get your home in top shape for the months ahead. Whatever the weather, caring for your home now will help to ensure a worry-free, comfortable spring & summer. Follow a few of these tips each week and you'll be done in no time.
Inspect exterior bricks and siding for gaps and cracks and make any needed repairs.
If paint is peeling, cracking, or chipped, repair and repaint now.
Remove window screens and clean with a soft brush and soapy water. Repair any holes or tears or replace the screen material before reinstalling.
Have air conditioning units serviced to ensure good operation. Promote air circulation around the unit by keeping surrounding shrubs and plants trimmed.
Clear debris from gutters and eaves to allow rainwater to drain properly.
Seal cracks in the driveway and keep walkways clear of debris and overgrown plants.
Test irrigation/sprinkler systems and replace any broken sprinkler heads. Check for proper water coverage for all areas of yard and adjust if necessary.
Power wash decks and patios and seal surfaces as appropriate.
Vacuum or brush off refrigerator coils to help maintain energy efficiency.
Check dehumidifier for proper operations.
Take area rugs outside and hang them over a deck or porch rail to air out.
Adjust ceiling fans for proper balance and change the rotation to the summer setting. Also, give the unit a good dusting..
Close the chimney flue to prevent insects from entering and to help keep cool air in.
Repot houseplants to give their roots a fresh start for the summer.
As the weather improves, open windows on nice days to allow fresh air flowing throughout the home.
Sellers: How to Decide Between Multiple Offers
Sellers: How to Decide Between Multiple Offers
What a splendid dilemma! You’ve received several offers on your property. Which one should you choose? It’s not always the highest one.
Here are just some of the areas I could ask you to pay particularly close attention to as you're weighing the options.
1. Do the math. This goes beyond simply calculating the dollar difference between the various offer prices. Before you do that, be sure to do all the math. Subtract things like closing costs, fees and potential repairs to determine the net proceeds of each offer.
2. Consider the financing. Can the buyer provide proof from the bank that there are funds to back the offer? I can help verify this – and help you understand the terms of the buyer's financing.
3. Motivation. Do the buyers have a baby-sitting parent in the neighborhood? A new job just around the corner? Buyers with extra motivation to purchase your home are less likely to press for concessions and more likely to work harder to close the deal. Some buyers even include a personal letter with their offer to explain why they want the home. These letters can be particularly helpful in multiple-offer situations.
4. Timeline. Note the closing date each offer proposes. You'll want a closing date that best meets your needs. You can always counter a closing date, too, if the best offer doesn't quite meet your timeline.
Weighing the pros and cons of each offer can be tricky. An experienced agent can help you clarify, calculate and secure the very best deal for you.
Credit Reporting Firms to Improve Practices
BY VIJAY YADLAPATI, CHARLES DAWSON, DANIEL BLAIR
On Monday, March 9, 2015, the 3 largest credit-reporting firms – Equifax, Experian, and TransUnion – reached an agreement with New York state to overhaul their reporting and error resolution practices. Many of these changes will be implemented on a national basis roughly over the next 3 years. Specifically, the firms will be required to use trained employees to review and resolve consumer disputes.
Another major change will be the removal of medical debts from credit reports once the debts are paid instead of the typical 7 years. Finally, the credit bureaus will be required to implement a 180-day waiting period before adding any medical debt information to consumers' credit reports. This grace period is intended to allow consumers to clear up any discrepancies and catch up with other unpaid bills.
Think Pest Control
Common Pests and Your Home
The list of new responsibilities can seem overwhelming when you buy a home or become a first-time homeowner. One responsibility that tends to get overlooked until it becomes a larger issue is that of household pests. A household pest is "a destructive insect or other animal that attacks" your home. Pests range throughout the U.S., but the most common pests are those that have become almost commonplace in our lives. Here are some of the most common pests encountered by homeowners throughout the U.S., and what you can do to help prevent pests in your home.
Most common Spring and Summer Pests:
Termites are generally grouped by their nesting and feeding habits: subterranean, soil-dwelling, dry wood, damp wood and grass-feeding. They feed on dead plant material, generally in the form of wood, leaves, soil and animal dung. Termites can cause significant structural damage to buildings. Those classified as subterranean and dry wood are those that are responsible for the damage to homes.
Ants are the most common household pests in the north central states. They are social insects, and they have a wide variety of nesting habits. Ants can build nests in soil, behind moldings, baseboards and counter tops, and some types nest in decaying or moisture damaged wood. Ants will feed on all types of food, and ant damage varies. Most ants cause little damage, but carpenter ants can weaken wood structures similar to termites, and the majority of ants don't transmit diseases.
Flies are some of the most annoying pests in the home. They land on almost every surface, and their diet includes a wide variety of foods: human food, animal food, animal carcasses, garbage and excrement. Flies also carry germs and diseases. They are known to transfer over 100 pathogens, some of which include salmonella, anthrax, tuberculosis, and the eggs of parasitic worms.
Spiders are generally not harmful and they do feed on other insects like flies and other spiders. Most spiders found in the home are not venomous, but there are some that homeowners don't want to find inside their house. The Black Widow and Brown Recluse are two of the most talked about spiders homeowners do not want to find in their homes. Black Widows can be found throughout the U.S., and Brown Recluse are predominately found in the Midwestern States, most notably Oklahoma, Arkansas and Missouri. All spiders have the ability to travel to all states by ways of hiding in boxes, packages and produce.
Most Common Fall and Winter Pests:
Stink bugs are found throughout the U.S., and most of the time homeowners don't know they have an issue until early fall, when stink bugs turn up on the sunny side of homes where they can warm themselves. During the summer months stink bugs live outside, feeding on fruits, grains and other crops. During the colder months, stink bugs will hide inside walls or in attics and crawl spaces. These bugs get their name from the unpleasant odor they produce when they feel threatened.
Rodents are warm-blooded and are found throughout the U.S. The most common types of rodents are mice and rats. Both rapidly breed and are capable of squeezing through spaces that appear smaller than their bodies. Rodents seek warm shelter in the cold months, particularly mice, who seek food, water and warmth within homes. Generally, if one rodent is found, many more are hiding nearby.
How to Avoid Pests:
Most home pests can be avoided by doing simple, everyday things. As a homeowner, make sure your doors and windows are closed, as these are the most common ways for pests to enter a home. Make sure window and door screens are in good repair or working order. By eliminating moisture buildup in small areas and basements you reduce the risk of creating hospitable environments for pests. Sealing openings in a home's foundation will help reduce access to your home.
Trees harbor pests -- by keeping tree branches trimmed and away from the home you deter pests (especially spiders) from having easy access to your home's roof. Moisture attracts pests -- direct rain water away from the home and foundation to prevent possible moisture buildup. If you have fire wood, store it at least 20 feet away from the house. Flies and other pests are attracted to garbage, so ensuring that garbage cans are sealed tight and all animal deposits are picked up will help reduce the risks of attracting pests into your home. The best deterrent to pests remains a clean, uncluttered home, where food, crumbs, and anything else that has the potential to attract pests is put away, covered or thrown away.