Ready to Trade-In Your Home? Perhaps You Should Remodel Instead!
February 04, 2014
Ready to Trade-In Your Home?
Perhaps You Should Remodel Instead!
By Roy Sperr, Mortgage Loan Originator
Equity Source Mortgage, Inc.
ROGERS, MN – Each year, millions of Americans move into the home of their dreams. As time goes by, families expand, kids grow older, and suddenly that home isn’t quite so perfect anymore. Or perhaps you still love your home, but you really want a gourmet kitchen and a larger master bedroom. Should you start looking for a new house? Or would it be better to stay where you are and remodel instead?
Both options involve a significant investment of time and money, so it’s important to take your time and make an informed decision. You’ll also want to be sure to consider both the financial and the emotional sides of the equation. Let’s begin by examining the financial factors involved.
Moving: A good local real estate agent should be able to assist you with estimates on these numbers.
• How much will it cost to purchase a home that will meet your needs?
• How much could you sell your existing home for? Don’t forget to subtract the agent’s commission from this total.
• What will it cost to move? According to real estate consultant and best-selling author of Remodel or Move, Dan Fritschen, a typical move costs 10% of the value of your home.
• How much will your property taxes increase as a result of the move?
Remodeling:
• What projects do you want to have done and how much will they cost? An architect or general contractor will be able to assist you with these figures.
• How much will the improvements add to the value of your home, also known as the “payback”? A local real estate agent can assist with this as well.
If the decision about whether to renovate or move were purely a financial one, then it would be quite easy to look at the numbers and come to the right conclusion. However, there are also emotional factors that come into play, and they have a value as well. Let’s consider some examples.
Reasons you may want to move:
• If you relocate to a new neighborhood, your children could attend superior schools.
• You would like to reduce your commute or have better access to local amenities, such as restaurants and shopping.
• You’re not particularly fond of your current neighborhood.
• Your yard is too small, and you cannot expand it.
Reasons you may want to stay and remodel:
• You’re happy with your location. It’s convenient, you love your neighbors, and the schools are either excellent or are not a factor.
• You love the layout of your home.
• All you need is a little more space, and your home will be perfect.
Of course only you know what is truly important for your happiness, so try to use these questions as a starting point. Create a list of the pros and cons of each scenario and leave it someplace accessible, so that you and your spouse can add to it as you think of additional factors. You may also want to consider attending open houses and visiting new housing developments to see what is available and how your home compares.
Once you’ve completed your list and your financial assessment, it’s time to draw some conclusions. Are the numbers and the emotional factors pointing you in a clear direction? If you’re still feeling unsure and would like some additional assistance, you may want to read Dan Fritschen’s book, Remodel or Move, or visit his website at www.remodelormove.com. Both contain a calculator that will assist you with the difficult task of quantifying the ramifications of your decision. In addition, you can learn tips to assist you with the next step, after you’ve determined what it will be.
If you choose to remodel, then you’ll need to have a clear idea of what you want to accomplish before finalizing any details with the contractor or architect. One of the most expensive things you can do is change the project midstream.
If you decide to move, then there are low-cost improvements you can make to your existing home that will help it to sell more quickly. The kitchen and the bathrooms provide the biggest return on investment in this area.
Whether you decide to remodel or buy a new home, it’s important to ensure that you have proper financing in place prior to moving forward. If you decide to purchase a home, a mortgage originator will help you to determine how much you can afford, as well as which loan package works best with your overall financial plan. In the case of remodeling, you should meet with a mortgage professional before any construction takes place. Otherwise you may severely limit the type of financing options available to you.
Additional Resources:
Remodel or Move?: Make the Right Decision, by Dan Fritschen
If you would like to talk more about what your options might be in exploring this process, please feel free to contact Roy or Shawn at 763-657-2000 or email them at roy@equitysourcemortgage.net or shawn@equitysourcemortgage.net . They are here to help you.
Read MoreThe price of a new constructed home
January 08, 2014
The job markets received good news this morning after it was reported that job growth in December was better than expected. ADP announced that private employers added 238,000 new jobs in December, above the 203,000 that was expected. The gains were broad based across all industries with heavy concentrations in construction and manufacturing.
The Mortgage Bankers Association reported this morning that its Market Composite Index, a measure of total loan application volume, rose by 2.6% in the latest week. It was the first increase in a month. The refinance index rose by 5% while the purchase index declined by 1%. The refinance portion of mortgage activity was 63% of total applications.
The National Association of Home Builders reported yesterday that newly built single family homes are getting bigger, more expensive to build and costlier for the buyer. The cost to build a single family home in 2013 was $246,453, the highest since 1998. The price of a new constructed home rose by 25% in 2013 to $399.532.
Protecting Your Credit During Divorce
December 17, 2013
By Roy Sperr, President
Equity Source Mortgage, Inc.
ROGERS, MN– When a marriage ends in divorce, the lives of those involved are changed forever. During this time of upheaval, one thing that shouldn’t have to change is the credit status you’ve worked so hard to achieve.
Unfortunately, for many, the experience is the exact opposite. Unfulfilled promises to pay bills, the maxing out of credit cards, and a total breakdown in communication frequently lead to the annihilation of at least one spouse’s credit. Depending upon how finances are structured, it can sometimes have a negative impact on both parties.
The good news is it doesn’t have to be this way. By taking a proactive approach and creating a specific plan to maintain one’s credit status, anyone can ensure that “starting over” doesn’t have to mean rebuilding credit.
The first step for anyone going through a divorce is to obtain copies of your credit report from the 3 major agencies: Equifax, Experian®, and TransUnion®. It’s impossible to formulate a plan without having a complete understanding of the situation. (Once a year, you may obtain a free credit report by visiting www.AnnualCreditReport.com.)
Once you’ve gathered the facts, you can begin to address what’s most important. Create a spreadsheet, and list all of the accounts that are currently open. For each entry, fill in columns with the following information: creditor name, contact number, the account number, type of account (e.g. credit card, car loan, etc.), account status (e.g. current, past due), account balance, minimum monthly payment amount, and who is vested in the account (joint/individual/authorized signer).
Now that you have this information at your fingertips, it’s time to make a plan.
There are two types of credit accounts, and each is handled differently during a divorce. The first type is a secured account, meaning it’s attached to an asset. The most common secured
accounts are car loans and home mortgages. The second type is an unsecured account. These accounts are typically credit cards and charge cards, and they have no assets attached.
When it comes to a secured account, your best option is to sell the asset. This way the loan is paid off and your name is no longer attached. The next best option is to refinance the loan. In other words, one spouse buys out the other. This only works, however, if the purchasing spouse can qualify for a loan by themselves and can assume payments on their own. Your last option is to keep your name on the loan. This is the most risky option because if you’re not the one making the payment, your credit is truly vulnerable. If you decide to keep your name on the loan, make sure your name is also kept on the title. The worst case scenario is being stuck paying for something that you do not legally own.
In the case of a mortgage, enlisting the aid of a qualified mortgage professional is extremely important. This individual will review your existing home loan along with the equity you’ve built up and help you to determine the best course of action.
When it comes to unsecured accounts, you will need to act quickly. It’s important to know which spouse (if not both) is vested. If you are merely a signer on the account, have your name removed immediately. If you are the vested party and your spouse is a signer, have their name removed. Any joint accounts (both parties vested) that do not carry a balance should be closed immediately.
If there are jointly vested accounts which carry a balance, your best option is to have them frozen. This will ensure that no future charges can be made to the accounts. When an account is frozen, however, it is frozen for both parties. If you do not have any credit cards in your name, it is recommended you obtain one before freezing all of your jointly vested accounts. By having a card in your own name, you now have the option of transferring any joint balances into your account, guaranteeing they’ll get paid.
Ensuring payment on a debt which carries your name is paramount when it comes to preserving credit. Keep in mind that one 30-day late payment can drop your credit score as much as 75 points. It is also important to know that a divorce decree does not override any agreement you have with a creditor. So, regardless of which spouse is ordered to pay by the judge, not doing so will affect the credit score of both parties. The message here is to not only eliminate all joint accounts, but to do it quickly.
Divorce is difficult for everyone involved. By taking these steps, you can ensure that your credit remains intact.
If you have questions about your situation, please feel free to contact Roy or Shawn at 763-657-2000.
Read MoreWhat is the Velocity of Money and How Does it Impact Home Loan Rates?
December 06, 2013
By Roy Sperr, President
Equity Source Mortgage, Inc.
Rogers, MN – If you’ve been watching the economic news, you’ve probably noticed that market experts and traders have been keeping a close eye on the Commerce Department’s Personal Spending and Personal Income reports. Obviously, those reports provide insight into the health of our economy, but did you know they also influence home loan rates? That’s right, personal spending can actually influence the interest rates that are available when you purchase or refinance a home.
Here’s why. It has to do with something called the velocity of money. Even though the government keeps pumping money into the system, nothing happens until that money is spent or lent – and passes from one hand to another or one business to another. The speed at which this money passes between parties is called the velocity of money.
With the job market still very sluggish, consumers aren’t spending much money these days, and businesses are still reluctant to spend money to make investments in their business. With the present velocity at low levels, inflation remains subdued and that’s good for home loan rates. That’s because rates are tied to Mortgage Bonds and inflation is the archenemy of Bonds, so low inflation is good for Bonds and rates. However, once velocity increases, the excess money in the system will cause inflation – which is bad for rates, since even the slightest scent of inflation can cause home loan rates to worsen.
While we certainly want to see better economic recovery news in the near future, we have to remember that there’s an inverse relationship between good economic news and Bonds and home loan rates. Weak economic news normally causes money to flow out of Stocks and into Bonds, which helps Bonds and home loan rates improve. Strong economic news, on the other hand, normally has the opposite result.
Currently, home loan rates are at a historically low level, but that situation won’t last forever. That means now is an ideal time to purchase a home or refinance before the velocity of money – and rates – change. If you or anyone you know would like to learn more about the current economic situation and how to take advantage of historically low home loan rates, then please contact me.
Roy Sperr is affiliated with Equity Source Mortgage, Inc. a Licensed Broker, Minnesota Department of Real Estate.
Read More
13606 Birch Road, Rogers, MN 55374
View on Map
