Seven Mistakes On Mortgages That Can Be Dodged

 

Whenever you are making any large financial decisions, due diligence is a must. When it comes to obtaining a mortgage, overlooking these mistakes can cost several thousand. Here are seven mistakes that should not be overlooked when it comes to a mortgage.

Number one is to avoid not shopping around.

Just like with any other consumer product or service, you always want to shop around for the best deal. By doing this, homeowners can save by obtaining lower mortgage rates. According to a study done by Freddie Mac, consumers who obtain five rate offers saved around 16.6 basis points (bps) (or 0.166 percent) on their rate on average.

One myth that can be laid to rest is by shopping around for a mortgage you will lower your credit score. This is not the case. Usually, there are two weeks where you can have additional hard inquiries without penalty. Take your time and shop around do not just take the first offer without making sure it is the best for you.

Number two avoid paying unnecessary fees.

Do not just focus on your mortgage payment, there are additional fees that need to be considered when obtaining a mortgage. Even with no origination fees or lender commissions, there is still some additional cost that cannot be waived. The fees that can be waived are application fees, loan origination fees, loan officer commission and credit report fees.

Number three consider a 15 or 20-year mortgage.

You do save a little with a 30-year mortgage but that is only short-term. Over the life span of the mortgage, you will make payments for a longer period of time adding more interest than you pay to the lender.

With a 15-year mortgage, the monthly payments are higher but you will pay off the principal faster and with less interest paid to the lender. A 15-year mortgage interest rate is lower so you will be paying more towards the principal.

To make sure you make the right decision for you, compare the principal and interest on a 30-year fixed vs a 15-year fixed. If you are obtaining a $250,000 mortgage with a 10% down payment, a 30-year fixed will have a monthly payment of $1,024 with a 3.61% interest rate that totals to $143,719 in interest costs and a 15-year fixed with a rate of 3.13% will have a monthly payment of $1,568 and total interest cost of $57,226.

Number four consider all the cost when it comes to owning a home.

There are tons of hidden and sudden expenses when it comes to owning a home. Your final cost is not just the monthly mortgage payment so do not count on the figure a mortgage calculators give you.

A rule of thumb is to put away at least one percent of your home’s value each year for home maintenance and repair. So for a $360,000 house, you would set aside $3,600 a year or $300 a month.

Number five make sure you have a clear understanding of points and lender credits.

Points on a mortgage are referred to as discount points. When obtaining a mortgage you can pay off a one-time fee or points on top of your normal closing cost to get lower interest rates. Credits are referred to as lender credits. You would pay less in closing costs but have a higher interest rate.

Weigh each option to see which would be the best for you. Ask yourself how long will you hold on to the property? If you are going to keep the property for a long period of time you would benefit from paying discount points. However, if you are only planning to sell or refinance in a couple of years, lender credits are the way to go.

Number six check your credit score prior to obtaining a mortgage.

Your credit score can have a huge impact on approval for a mortgage. Each credit bureau allows a free credit report every year. It is always a good idea to review your credit report annually.

Number seven never leave any information off of your mortgage application.

The mortgage application is the first key step in getting preapproved. Misinformation or omitted information can lead to a non-approval. A common mistake many make is not including child support or alimony payments.

Lenders want to see everything you owe to make sure you can afford your mortgage payments. Even if you incur debt but make little or no payments, it is still owed.

Avoiding these mistakes is just one of the many steps you should take when obtaining a mortgage. When purchasing a home, your Realtor can help you make the right decision on a mortgage lender.

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Algiers Point Sees Plans For A Multi-Use Development

 David Fuselier, a real estate developer, wants to put a multi-use development that will include a grocery store, single-family houses and condominiums on 10 acres in Algiers Point. The property was once home to a local steam locomotives manufacturer.

The 10-acre site, located at 1200 Opelousas Ave, is the biggest undeveloped piece of land on Algiers Point. Unfortunately, contaminants were found on the land from decades of diesel fuel spills but in December 2020 after the issue had been rectified, Louisiana issued a certificate of completion.

In January 2020 Fuselier and his partners his sister, Megan Fuselier Spiehler; Stuart Coleman; and Andrew
Coleman, purchased the land for close to $3.9 million. They plan to begin construction in the Fall of 2021 and is slated to complete in two years. The partners hired architecture firm Concordia and will hold a meeting with the architect firm and the public for input.

If approved by the New Orleans Planning Commission and the City Council, they plan to build a 22,000-square-foot grocery store with a rooftop restaurant and bar. Although they have not signed with any grocery store tenant, they feel optimistic.

“We’ll have one soon,” Fuselier said. “We’re going to be talking to every local and national grocery tenant we can think of. There’s gonna be a lot of effort put into attracting the best that we can find.”

Plans show there will be 24 lots for single-family housing, 24 units for military veterans and 204 condo units for “workforce” housing priced at 60% to 120% of area median income.

“It’s really targeting people who do not qualify for other subsidy programs … but still need housing,” Fuselier said. “A lot of people are priced out of the market, and  we’re looking to bring opportunities for homeownership at affordable price.”

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Things To Consider When Deciding To Downsize Your Home

 

Different stages in your life also can affect the amount of living space you need. If you are in an empty nest stage or just want a change, downsizing might be your answer. Of course, downsizing has financial advantages but a smaller living space also means less upkeep, and lower monthly expenses overall.

Taxes can play a big part in this decision. Selling your bigger home will net you more income that can be taxed. According to the Department of Treasury Internal Revenue Service (IRS), if you sell your principal residence for a profit, up to $250,000 of that capital gain can be excluded from tax. If you are a married couple who files jointly you could have up to $500,000 from the sale of your home that is not taxed. For example, there are exceptions if a homeowner has owned their home for several decades or if a homeowner lives in a neighborhood that has experienced a huge appreciation.

Before selling your current home check to see if you pass the ownership and use test from the IRS. For you to claim the maximum exclusion you must have owned your current house you are selling for at least two years and the house you are selling must be your primary residence for at least two out of the last five years. The two years counted towards residency do not have to be consecutive.

The IRS will make exceptions such as selling before owning a home for two years because of a job change, divorce, or natural disaster or what the IRS deems as an unforeseen circumstance.  If the IRS decides you are eligible, then you will be able to prorate the exclusion.

You will need to determine the capital gains on the sale of your home. In order to do this, take the cost basis and subtract it from the selling price. Your cost basis includes the original purchase price, settlement fees, closing costs. The higher the cost basis the lower your potential tax liability will be.

If you are in the market to downsize, go through a local sales agent to both sell your current home and purchase your downsized home. A Realtor can help you with the right financial way to go when downsizing.

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A Unique Learning Tool for Students at Belle Chasse Academy

 Belle Chasse Academy is giving its students the opportunity to learn through the school’s culinary garden and teaching kitchen. The school follows the unique teaching method that incorporates food into traditional math, science, and social studies. Students can learn about botany, nutrition and Native American culture through food such as corn.

The Victory Garden is partially backed by the Emeril Lagasse Foundation and is the “nature-based classroom.” Emeril’s Culinary Garden & Teaching Kitchen, founded by Emeril Lagasse, incorporate gardening and cooking into regular school curriculums. The program enriches the lives of kids through a fun, fresh perspective on food. The program is used throughout elementary and middle schools around the country.

The crops which include this spring collard greens, cucumbers, carrots, tomato vines and peppers are surrounded by a butterfly garden. The butterfly garden serves as the pollinator garden and is filled with flowers. The garden also features several hydroponics systems that are in a greenhouse-like structure. Certain types of food such as bib lettuce is grown in a nutrient-rich water solution instead of soil.

During the year students plant and harvest the crops. While working with the crops students learn math skills, science skills and social studies skills. Math is learned from measuring ingredients in the kitchen classroom, social studies are learned by studying where each crop comes from and science is learned through proper food nutrition. A great hands-on example is Chef Ryan Galle, Belle Chasse Academy’s culinary education coordinator, recently guided his students through a lesson on how food provides them with energy.

“A light bulb goes off. A lot of times they think culinary arts is just pulling out a pan or a pot and putting some food in it, and that’s it. The kids really enjoy it, said Galle, a native New Orleanian. “This is one of the best concepts of hands-on learning because it gets them out of the classroom. They get fresh air. The experience brings a lot of children out of their shells.”

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