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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Seven Tips to Make Buying a House Easier

 
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Purchasing a home is in the top five most stressful events. Buying a house can be a complicated process but there are ways to make the process easier. Here are seven things you can do to simplify the process of purchasing a home.

1. Get your paperwork in order

 

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Getting your paperwork in order such as two years’ worth of tax returns, current pay stubs, bank statements for the last three months, cancelled rent checks, or copies of your lease for a loan application is one of the first steps. You will need to be pre-approved for a specific amount. This will help you with how much you can afford on a house. Realtors and sellers both want to see a pre-approval letter that lets them know you can afford the home and you are a serious buyer.

2. Find a real estate agent you can trust

 

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Finding the right sales agent is a very important step in the process of purchasing a home. Before choosing, interview at least three real estate agents. You will not only want to have a good rapport with an agent, but you will want to make sure they are well-rounded in the community you are looking to purchase a home in. You will want to choose an agent with the best track record of sales in your area, the best online or personal recommendations, and the one you like best. Staging, keeping a home show-ready, and listening to tactfully delivered feedback from people who’ve viewed your home means you’re going to be interacting with your agent a lot.

3. Start researching banks, credit unions, and loan officers

 

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Just like choosing the right real estate agent, choosing the right place to apply for a loan for your home is just as important. There are many types of loans and different institutions to choose from. Sometimes it might seem best to use a bank or credit union, but this is not always the case. Many times the banks and credit unions have vested interest and might push you to use certain Realtors, attorneys and home inspectors because they receive a portion of the commissions.

4. Get your financing in order

 

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After you have chosen your mortgage lender, you will need to get pre-approved. As mentioned earlier, you will need to have your paperwork in order along with your finances. The pre-approval letter is your ticket to let sellers know you are a serious buyer who can afford their home.

5. Find a home inspector you can trust

 

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A home inspector is a key factor in the success of your home purchase. You want to choose an inspector you can trust who is looking out for your best interest. In an older home, a trustworthy inspector will point out areas of concern such as problems with termites, water seepage, or shoddy construction. Find an inspector who would not mind if you tag along during the inspection. This is a good time to ask questions and get their advice.

6. Consider investing in title insurance

 

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Purchasing title insurance is a safety net against anything that could pop up on the property such as a lien. Title insurance cost from $1,000 and $3,000 on average, or .05 percent of the purchase price and is worth the cost. In many cases, mortgage lenders will require you to get title insurance.

7. Get your tradespeople lined up

 

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Renovations or repairs are a big part of homeownership. Have tradespeople lined up so that when something does go wrong, you can call on the spot. It is important to make sure they are reliable and honest. Ask around at places such as an independent home supplier. An independent home supplier will usually have the low down on who does sloppy work and who does good work.

Remember never try to purchase a home on your own. Follow these steps to simplify your home buying process. A local real estate agent can guide you through the process.

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Construction Jobs Are Up In Residential Construction

March 2021 saw the employment total payroll increase by 916,000. The unemployment rate also dropped in March 6%. As the country is slowly reopening from the pandemic, the labor market is improving. In fact, the residential construction employment is beyond the level seen in February 2020. There were 37,000 residential construction jobs added in March 2021.

This is good news for the US job market. During the pandemic, 22.7 million jobs were lost in March, April and December of 2020. For the jobs lost, 14.3 million have been recovered in the last 11 months.

The Bureau of Labor Statistics broke the increase down by industries. The top industry to see employment changes in March 2021 was the leisure and hospitality industry with 280,000 month-over-month change. Government followed with 136,000, construction gained 110,000, professional and business services saw 66,000, while educational services had 64,000, manufacturing 53,000, transportation and warehousing 48,000, other services 42,000, health care and social assistance 36,000, durable goods 30,000, wholesale trade 24,000, nondurable goods 23,000, retail trade 23,000, mining and logging 20,000, financial activities 16,000 and utilities 0.

Out of the 110,000 construction employment, 37,000 were in residential construction alone. In fact, 518,000 residential construction jobs have been created in the past 11 months. Residential employment was reported at 3 million in March 2021. Builders included 873,000 and 2.2 million were in residential specialty trade contractors. Over the last 12 months, home builders and remodelers added 87,900 jobs on a net basis. Since the low point following the Great Recession, residential construction has gained 1,047,900 positions.

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Baby Boomers Are Taking Advantage of the Current Home Seller's Market

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The current housing market is the hottest it has been since before the Great Recession. According to the National Association of Realtors® 2021 Home Buyers and Sellers Generational Trends Report, sellers made a median of $66,000 on the sale of their homes this year. This is a $6,000 increase from the same time in 2020. Sellers are reaping the benefits and the majority of sellers today are baby boomers.

"In a real estate market that is tipped in the favor of sellers, boomers and older homeowners are really the ones holding the cards," says realtor.com® Chief Economist Danielle Hale. Those who are selling homes can use the profits to help them buy new ones, she adds, pointing out that they're "generally better equipped to deal with market conditions."

Record low mortgage rates and lack of home inventory have buyers in a big competition. This buyer frenzy means homes are selling quickly and for high prices. Today sellers are getting roughly 99% of their original asking price for their home. Some sellers are even seeing bidding wars, getting a higher price than the original asking price. Current inventory is lasting only 3 weeks before they are sold.

When looking at sellers by generation, baby boomers make up 43% of those currently selling a home. Baby boomers are in a stage of life where they want to downsize. The pandemic has also shifted many baby boomers to want to move closer to family members in the same sized home.

Millennials make up the largest share of buyers at 37%. Out of the 37%, 31% of those buyers were first-time homebuyers. This market is a difficult market to navigate for first-time homebuyers."Millennials have a lot of headwinds entering the real estate market," says Jessica Lautz, NAR’s vice president of demographics and behavioral insights. "There's not enough homes to go around for the buyers who want to be able to purchase."

Another surprising fact is that younger buyers are more likely to pay over the asking price in this competitive market. “In a market where competitive bids are the norm in many areas, it’s interesting to note that younger buyers are more likely to pay over asking [price]," says Hale. "They've got longer working careers, so they [may be] more willing to take risks."

Of those homes that are in most demand, detached, single-family homes made up 81% of the sales so far this year. Buyers want a detached home with a backyard and a garage. Families want their own space and more space to accommodate home offices and remote schooling. Existing home sales are in more demand due to cheaper pricing and more in inventory. Only 15% of homes sold so far this year are new construction.

Generation X made up 18% of buyers that purchased multigenerational homes. This generation has aging parents that might need assistance. "They're purchasing multi-generational homes [to] take care of aging relatives and keep them out of nursing rooms or for caregiving of young children who may not be able to go to daycare or child care because of the pandemic," says Lautz. "The other big reason is pooling incomes to be able to buy a larger home."

The study indicated that today's typical buyer has a median income of $96,500 in 2019 with 65% married. 18% single women, 9% single men and 9% unmarried couples. “Single women remain a large buying force,” Lautz said in a statement. “A number of divorced women and those who were recently widowed purchased a home without the help of a spouse or roommate.”

Eighty-seven percent of buyers financed their homes while young buyers were the most likely to put all of their savings toward a down payment. Older buyers, such as baby boomers, purchased homes using money earned off a home sale.

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