Category Archives: Buyer Information

Top 10 Kitchen Trends of 2014

d7076940-b474-11e3-bdba-19c81b89fedf_1-KBIS_Thermador-Freedom-Kitchen“Kitchen remodels are some of the best investments that you can make in any home. Each year there are new ideas that appear around technology and materials.  Las Vegas, Nevada is home to the annual Kitchen & Bath Industry show, and here are some notes from a regular contributor of BobVila.com that we think you will find very interesting.”

DC Metro Realty Team – Denise Buck & Ed Johnson

This year is definitely the year for your kitchen! Over the past few years the trend of modernizing your kitchen to fit your lifestyle has been apparent with technology-driven appliances and innovative surfaces and materials. I traveled to Las Vegas, Nevada in February for the annual Kitchen & Bath Industry show (KBIS). Here are 10 wonderful highlights of the show and how your kitchen still rules the home.

Sink

 

 

 

 

 

 

1. Modern kitchen innovation that gives a hint of the past:

There has been a re-emergence in kitchen design to bring back old world finishes and blend them with modern innovation. Modern countertops in granite, marble and solid surfacing can take on a vintage appeal with beveled edges and details that went away with handcrafted cabinetry years ago. Kitchen faucets that resemble ‘hand-forged sentiments of early 20th century metalworkers, Artesso™kitchen faucets blend traditional design with industrial chic inspiration’ was gorgeous to see from Brizo faucets. It was also nice to see that kitchen manufacturers haven’t forgotten that historic details in the kitchen still have a place in our homes.

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2. Commercial-quality kitchen amenities in your humble abode:

While we all love the comfort of quaint homes, do you sometimes prefer the industrial feel of a commercial kitchen? At KBIS, you could see a definite trend of kitchen manufacturers appealing to both aesthetics. Blanco sinks features their Quatrus R15 stainless steel sink that offers a revolutionary sleek appeal while still enabling homeowners to wash it easily. Turn your kitchen into that commercial kitchen you always wanted with amenities that show off your inner culinary chef .

3. Kitchen accessories aren’t just for show anymore:

Years ago, kitchen accessories played a minor role in function and were instead meant to compliment the sink, faucet or cabinetry of the kitchen. Today, kitchen brands are realizing that homeowners want form, function, and beauty all wrapped up into one. Accessories such as colanders and cutting boards can now fit seamlessly into the sink to help you drain or cut your favorite vegetables. There is no longer a reason to wonder, “What does that do?” in your modern kitchen.

Organized Drawers

 

 

 

 

 

4. Organize your kitchen drawers like never before:

Drawers are commonly used to separate items like spices and utensils. But did you know you can also use your drawers to store bread in their very own customized bread boxes? There was a big representation of brands such as Poggenpohl’s drawer accessories that included cutlery trays, spice racks, knife blocks, bread drawers and aluminum foil holders, among other things. Instead of organizing just a few items in your kitchen, organize your kitchen drawers around the way you and your family use the kitchen.

5. Lighting your kitchen in eco-friendly ways:

Just like the evolution of your home, lighting plays an integral role in ensuring your kitchen experience is safe, enjoyable, and helpful for all your kitchen activities. While traditional lighting fixtures such as pendants and under cabinet lights aren’t new – the use of eco-friendly LED lighting inside of cabinets, drawers, and below the base cabinets is proving to be more helpful to the culinary enthusiast. Whether you have your hands full and don’t have time to reach a light, or you’re looking to add more illumination to your kitchen’s darkest nooks, LED lit cabinetry and drawers may be exactly what you’re looking for.

Decorative Tile

 

 

 

 

 

 

 

6. Decorative tile becomes the showstopper over the appliances:

There used to be a time when you walked into a kitchen and all eyes went to the appliances. While appliances are still a major opportunity to wow guests, decorative tile is the perfect crowning glory to a dynamic kitchen. This year, tile manufacturers are holding nothing back and Walker Zanger has always been known for their innovative and iconic tile design styles. This Chelsea Art Glass backsplash is the “Epitome of glass craftsmanship, offering a collection of stunning Tiffany-inspired mosaics created from sheets of colorful, marbleized glass. The glass sheets are hand-cut and blended to create 12 unique shades”. If you’re looking for a way to add pizazz to your kitchen, look to decorative tile to add a glamorous personality to the heart of your home.

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7. Saving money in the kitchen is easier than ever

While we all enjoy splurging on our home improvements, saving money on your kitchen renovation is essential. While there was an enormous representation of high-end remodeling ideas at KBIS, there was also a nice contrast of kitchen brands that understood that homeowners like to save money too. I interviewed fixture manufacturer Danze, whose high-quality kitchen faucets are designed save consumers money. They think, “…Your kitchen faucet should do more than just wash vegetables. It should nourish your eye for great design, too. We offer an appetizing array of unique kitchen faucets, bar and convenience faucets and pot fillers. With plenty of smart styles to reflect your personal taste.”

8. Filtered water for your family, delivered in a gorgeous way

Over the years water filtration has become more important as water becomes a more precious resource. Kitchen plumbing manufacturers are finding a way to eliminate the clunky add-on water filter on the outside of your faucet, or under your sink. Brands like ROHL’s Perrin & Rowe are using, “… Filtration featuring Triflow® Technology. This innovative faucet series provides beauty and functionality in one space-saving design. Filtration happens right in the faucet and eliminates the need for an under- the-counter system. Enjoy hot, cold and filtered water while saving money and protecting the environment’”.

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9. Affordable countertop surfaces that give the look of luxury

Countertops can be a very expensive portion of your kitchen entourage. Lucky for you there are several kitchen countertop manufacturers that understand homeowners want the look of granite, stone, and marble without the hefty price tag.  Formica Corporation has created the 180fx® laminate countertop surface. “A revolution in surfacing with true-to-scale granite patterns that offer visual drama unmatched by any other laminate. New sophisticated patterns focus on a neutral palette – versatile enough to pair with any interior design concept.” So don’t think the kitchen remodel you want is out of reach. It may be possible thanks to these new patterns!

10. Creating connections between your lifestyle and cooking

We live in a wonderful design age where kitchen manufacturers are realizing the importance of connecting how we all live in our homes, the way we interact with our appliances, the way we prepare food, and the way appliances, fixtures, and finishes should interplay with our senses. KBIS is a wonderful example of how the best minds come together to show you what is available today and what they are working on for your future. It’s still true: The kitchen rules our homes and rightfully so. It’s the soul of our home and the way we come together with family and friends!

By Freshome for BobVila.com as published on Yahoo Homes

Be sure to Deduct the Points you Paid

Deductibility“Always remember to take the proper deductions on your taxes when you have bought or refinanced your home.”

DC Metro Realty Team – Denise Buck & Ed Johnson

Prepaid interest, sometimes called “points”, is generally tax deductible when a person pays them in connection with buying, building or improving their principal residence. When points are paid on a refinance, they are not a current deduction but have to be taken prorata over the life of the mortgage.

For instance, if $3,000 in points were paid on refinancing a 30 year mortgage, a deduction of $100 per year is allowed. When the loan is paid off or replaced by refinancing again or the home is sold and the mortgage paid off from the proceeds, the balance of any un-deducted points may be taken in that tax year.

Your tax professional needs to be made aware of any of these situations so that he or she can accurately reflect the deductions in your return. Currently, the most common situation is homeowners may be refinancing their home for the second, third or even, fourth time. If there are points that have not been completely deducted, they need to be treated in the year of refinancing.

For more information, see points in IRS Publication 936; there is a section on Refinancing in this publication. For advice considering your specific situation, contact your tax professional.

How’s Your IQ on the QM (Qualified Mortgage)?

Qualifiying Quideline“Recently a number of changes took place on the Qualified Mortgage Rule.  In the end, these changes will affect how you are looked at by the Mortgage Lenders.  You should understand what changes took place and what the lenders are looking for these days when making their decisions.”

 

DC Metro Realty Team – Denise Buck & Ed Johnson

The Qualified Mortgage Rule came into effect on January 14, 2014 as one of the results to the Dodd Frank Reform Act to protect consumers from predatory lending practices. This will affect the underwriting standards that the majority of lenders will use to qualify borrowers.

The ability to repay rule states that financial information must be supplied by the borrower and verified by the lender. The borrower must have sufficient assets or income to pay back the loan which limits the maximum debt-to-income ratio of 43%. In an effort to present a more accurate picture of the costs to the borrower, teaser rates can no longer hide a mortgage’s true cost.

A maximum of 3% in upfront points and fees can be paid on behalf of the borrower. There can be no negative amortization, interest-only or balloon payments and the loan term limit cannot exceed 30 years.

While there are more requirements, most deal with good underwriting practices that are followed by reputable lenders such as considering and verifying things that affect the ability to repay the mortgage like income, assets, employment status, simultaneous loans, debt, alimony, child support and credit history.

Buying a Home Less Expensive than Renting

“We often have prospective First Time Buyers who are trying to weigh the Pros and Cons of Renting versus Buying.  Usually ‘Financially Speaking’ it is better to Buy in the long run, but you have to understand your current situation thoroughly.  Working with one of our Lenders will help answer the questions you need answered before making this final decision.”

 

DC Metro Realty Team – Denise Buck & Ed Johnson

Trulia released their Rent vs. Buy Report last week. The report explained that homeownership remains cheaper than renting in all of the 100 largest metro areas by an average of 38%!

The other interesting findings in the report include:

  • Even though prices increased sharply in many markets over the past year, low mortgage rates have kept homeownership from becoming more expensive than renting.
  • Some markets might tip in favor of renting this year as prices continue to rise faster than rents and if – as most economists expect – mortgage rates rise, due both to the strengthening economy and Fed tapering.
  • Nationally, rates would have to rise to 10.6% for renting to be cheaper than buying – and rates haven’t been that high since 1989.

Buying a home now makes sense. You can lock in a mortgage payment before home prices and mortgage rates rise as experts expect they will. If you rent, your housing expense will only continue to increase.

This article originally posted by Keeping Current Matters. Read more articles like this at www.KCMblog.com.

Should I Rent My House If I Can’t Sell It?

Home-For-Rent“It’s not uncommon for people decide to keep their current home and rent it out, when they decide to buy a new home.  But is that the right decision for you?  There are many factors to consider first.  Here are 10 things to think about before you take the plunge into becoming a landlord.”

 

DC Metro Realty Team – Denise Buck & Ed Johnson

A recent study has concluded that 39% of buyers prefer to rent out their last residence rather than sell it when purchasing their next home.

The study cites that many homeowners were able to refinance and “locked in a very low mortgage rate in recent years. That low rate, combined with a strong rental market, means they can charge more in rent than they pay in mortgage each month, so they are going for it.”

This logic makes sense in some cases. We believe strongly that residential real estate is a great investment right now. However, if you have no desire to actually become an educated investor in this sector, you may be headed for more trouble than you were looking for. Are you ready to be a landlord?

Before renting your home, you should answer the following questions to make sure this is the right course of action for you and your family.

10 Questions to Ask BEFORE Renting Your Home

1) How will you respond if your tenant says they can’t afford to pay the rent this month because of more pressing obligations? (This happens most often during holiday season and back-to-school time when families with children have extra expenses).

2) Because of the economy, many homeowners can no longer make their mortgage payment. What percent of tenants do you think can no longer afford to pay their rent?

3) Have you interviewed a few experienced eviction attorneys in case a challenge does arise?

4) Have you talked to your insurance company about a possible increase in premiums as liability is greater in a non-owner occupied home?

5) Will you allow pets? Cats? Dogs? How big a dog?

6) How will you actually collect the rent? By mail? In person?

7) Repairs are part of being a landlord. Who will take tenant calls when necessary repairs arise?

8) Do you have a list of craftspeople readily available to handle these repairs?

9) How often will you do a physical inspection of the property?

10) Will you alert your current neighbors that you are renting the house?

Bottom Line

Again, renting out residential real estate historically is a great investment. However, it is not without its challenges. Make sure you have decided to rent the house because you want to be an investor, not because you are hoping to get a few extra dollars by postponing a sale.

This article originally posted by Keeping Current Matters. Read more articles like this at www.KCMblog.com.

Smart Alternatives to putting 20% Down

Home Loan

“With all the changes in recent years it’s hard to know what the options are on getting a loan. Many people think that you have to have 20% down to even get started.  The truth might just surprise you.  These days when we first start talking to buyers we make sure they know all the options available to them by having them talk to one of our recommended lenders.

The following article might give you some new ideas as you begin to think about buying”

DC Metro Realty Team – Denise Buck & Ed Johnson

When you started researching what it takes to buy a home, you probably came face-to-face with one number over and over again: 20 percent. Traditionally, that’s how much was needed to buy a home.

These days, there are a number of alternatives to the 20 percent down payment, with some options requiring down payments of 3 to 5 percent, while others offer loans with 0 percent down.

Keep reading to learn more about these alternatives…

Alternative #1 – FHA Loan

If you’re a first-time homebuyer, consider a Federal Housing Administration (FHA) loan. It’s a type of federal assistance loan that allows lower-income Americans to borrow money to purchase a home they could not otherwise afford.

Buyers can get an FHA loan with a down payment as low as 3.5 percent of the purchase price, according to the U.S. Department of Housing and Urban Development.

“The FHA loan is designed to protect buyers from buying more house than they can afford,” says Paula Pant, founder of Afford Anything, a website that helps people reach their financial goals. “It limits buyers to spending no more than 31 percent of their gross monthly income on their total house payment. In other words, it protects buyers against making risky decisions.”

However, Pant says there is one drawback: Buyers will need to pay mortgage insurance as a result of not furnishing a 20 percent down payment.

“The cost of this insurance counts towards the total house payment, which is capped at 31 percent of a buyer’s gross monthly income. So, for example, if they earn $1,000 per month (gross), they can’t pay more than $310 per month towards all mortgage expenses, including the principal, interest, taxes and insurance, including PMI.”

Alternative #2 – Down Payment Assistance through City and Federal Programs

In many cities, the local or federal government offers assistance programs to revitalize areas hit hard by natural disasters or recessions. In these cases, homeowners are often able to get a helping hand if they know where to look.

“A program called Invest Atlanta, spearheaded by the city of Atlanta, gave me $15,000 toward the purchase of my first home because I was buying a foreclosed home within the Atlanta city limits,” says Lauren Bowling, founder of the personal finance website, L Bee and the Money Tree.

“These city and state programs are out there, but you have to do your research in order to find them. If you have a particularly good mortgage broker that you are working with, they should be able to point you in the right direction.”

Alternative #3 – Get a Veteran Affairs (VA) Loan

“VA loans are granted to military veterans and qualified buyers can get a home loan for no money down,” says Pant.

According to the Department of Veteran Affairs, a VA loan can help you purchase or refinance a home at a low interest rate, and often doesn’t require a down payment. To qualify for this loan, potential homebuyers must meet specific service requirements and have:

• Good credit score
• Sufficient income
• Certificate of Eligibility (COE)

“As an added bonus, the buyers are not required to pay mortgage insurance. Furthermore, federal regulations limit the amount of closing costs, appraisal costs and loan origination fees, meaning that people who take out VA loans will not have to pay an egregious amount of fees,” adds Pant.

For more details and information on VA Loans

Alternative #4 – Get a USDA Loan

The U.S. Department of Agriculture (USDA) insures low-down-payment loans to low-income borrowers who want to buy houses in rural areas, Pant explains.

“Buyers can qualify for this loan if their income is no greater than 115 percent of the median income for the area. The USDA approves qualified houses based on the location of the home. Buyers can put zero money down, but they are still required to pay mortgage insurance,” she adds.

She adds that loan amounts vary considerably depending on a number of factors, including:

• The part of the country the house is located in
• Whether it’s in an “eligible area”
• If the income of the family buying the home fits within certain limits relative to the median incomes within that particular area

“The family’s income will determine how large of a loan the family can qualify to receive,” she says. “The USDA limits them from spending more than 29 percent of their income on their mortgage, and they cannot spend more than 41 percent of their income on all debt payments combined, including student loans, credit card minimums, etc.”

Pant says the USDA offers this program in order to assist low-income and moderate-income people who live in rural areas to become homeowners.

“In other words, they’re trying to encourage homeownership.”

Determined to Save 20 Percent? Consider these Tips…

If you still have your mind set on saving a 20 percent down payment, here are some smart ways to get you there faster.

The Bank of Mom and Dad: “While this certainly isn’t a new angle, many parents who can afford to gift are now able to do so,” says Bowling. “And it’s not just parents who can give. In fact, each individual, regardless of relation, can gift up to $14,000 per recipient without triggering a gift tax. So, for example, if my parents wanted to give me and my future spouse a gift, they could each give $28,000 to each of us, for a total of $56,000.”

Tap into your Roth IRA: Bowling says she took $1000 out of her Roth IRA to help pay for the down payment on her house. “Since I can take out up to $10,000 of this money for a home purchase penalty-free, I thought it would be best to use the IRA money for the down payment, and then use my own savings for the repairs and renovation on the home.

Take money out of your 401K: Tapping into your retirement fund to pay off your mortgage is another option to come up with a down payment. However, before going this route, you’ll want to ensure that the rate of return on your mortgage is greater than the return on your 401K investments. Talk to your financial adviser or lender to figure out which option is best for you.

Create Sub-Savings Accounts: Pant says that by making saving more personal, you may find it easier to save. “I’m a huge fan of creating multiple sub-savings accounts and nicknaming each sub-account with your savings goal, such as ‘Our first home’ or ‘Trip to Paris.'”

Here’s how it works: You open one savings account with a bank like SmartyPig. This is technically only one savings account, but the bank’s website allows you to create mini “sub-accounts” underneath it, so instead of mixing all of your money into one giant pool, you can split up your savings between these various sub-accounts. Pant says that you can then nickname each sub-account, which may motivate you to stay on-course.

This article was originally published on Yahoo! Homes 

Mortgage Rates Projected to Rise in 2014

Arrow Up“We keep reading and hearing more and more about this.  It does look as though there are changes coming.  If you’ve been on the fence and you’re in the position to possible make the decision to buy, now is a good time.  Read this article for a good insight as to what is happening in the Market and what is possibly coming”

DC Metro Realty Team, Denise Buck & Ed Johnson

It is projected that if the Fed continues to cut back on bond purchases that long term mortgage rates would start to climb. Many experts felt that Janet Yellen, who replaced Ben Bernanke as Fed Chair, was going to be less inclined to continue tapering bond purchases at the level established.

However, in her testimony in front of the Financial Services Committee last week, Yellen made it quite clear that she will in fact continue the current pace of tapering:

“In December, the Committee judged that the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions warranted a modest reduction in the pace of purchases, from $45 billion to $40 billion per month of longer-term Treasury securities and from $40 billion to $35 billion per month of agency mortgage-backed securities. At its January meeting, the Committee decided to make additional reductions of the same magnitude. If incoming information broadly supports the Committee’s expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective, the Committee will likely reduce the pace of asset purchases in further measured steps at future meetings.”

What does that mean to a prospective purchaser? Currently, Freddie Mac’s 30 year rate is at 4.28%. Here are the projected interest rates for this time next year:

2.18 Visual.2

This article originally posted by Keeping Current Matters. Read more articles like this at www.KCMblog.com.

7 Home Buying Mistakes to Avoid

Housing Questions“After helping Home Buyers for over 25 years, we’ve come to know a thing or two about what ‘Not’ to do.  We love this article and it sums up perfectly some of the biggest mistakes that you can make.”

DC Metro Realty Team, Denise Buck & Ed Johnson

For most people, a home is the largest purchase they’ll ever make, so choosing the wrong property can have disastrous implications for their wallets and well-being. Still, many homeowners feel a strong sense of pride in putting their mark on the property, building equity and having a place to truly call their own. Whether you’re a seasoned or first-time buyer, here’s a look at seven homebuying mistakes to avoid.

1. Using the wrong real estate agent. Just because your sister’s college roommate’s friend just got a real estate license doesn’t mean she’s the right agent for you. San Francisco real estate agent Herman Chan suggests vetting agents and looking for someone who does real estate full time and knows the local inventory. “You can lose an offer if you’re not responsive in a couple of hours,” he says. Request the agent’s sales data, and find out how he or she communicates. Chan recommends asking questions like these to gauge the agent’s tech-savyness: “Is it OK if I text you? Is it OK to DocuSign things? If I can’t make an open house on Sunday, can you shoot me a video?” If you prefer to check texts and emails on your phone, you may not want an agent who insists on faxing contracts.

2. Shopping before you get preapproved. Before you get serious about buying real estate, find out how much mortgage you qualify for and get a preapproval letter from your lender. “If you fall in love [with a property], write that offer and then find out you can’t afford it, it’s an emotional roller coaster you can’t afford,” Chan says. Many agents won’t even take buyers to showings until they have a preapproval letter for that very reason.

3. Maxing out your spending power. Qualifying for a half-million dollar mortgage does not mean you should buy a McMansion. Jon Sterling, regional sales manager for Chase International Real Estate in Lake Tahoe, Calif., says he’s seen people, especially first-time buyers, make this mistake. “It’s wiser to be a little more conservative,” he adds. Homeowners have additional expenses such as property taxes, condo fees and maintenance that renters do not, so some first-time buyers fail to budget for these extra costs and assume they can afford a monthly mortgage equivalent to the rent they paid. “If you buy into a [homeowners association], you don’t know what their future plans are,” Sterling says. If, for instance, a storm rips the roof off the clubhouse or the association decides to upgrade the common areas, you may get hit with a special assessment to cover those costs. For these unexpected situations, it’s a good idea to keep a cash reserve on hand. Some dual-income couples choose to qualify based on just one income to give themselves a financial buffer.

4. Taking advice from outsiders. Parents, relatives or friends who haven’t bought property in the local market may not understand local pricing and market conditions. Parents or in-laws who own houses in the suburbs may also have unrealistic expectations about what the equivalent amount of money buys in the city. “Be careful about people that are giving you advice from across the country,” Sterling says. When parents are gifting money for a down payment, their input may be necessary, so Sterling tries to show properties only when “all the decision-makers are in the car.”

5. Skipping the inspection. Home inspections can help alert potential buyers to problems such as structural issues, faulty wiring and other problems a layperson probably wouldn’t spot. But if you’re in a market that moves quickly, you might be tempted to skip an inspection to make the offer more appealing, Sterling says. Insisting on an inspection might slow the process, but as he points out, “any seller that is going to knock you out because of that is probably hiding something anyway. You’re spending hundreds of thousands of dollars, [so you want] to make sure you’re getting what you think you’re getting.”

6. Overdoing contingencies. While home inspections are recommended, Michael Alderfer, a Washington, D.C., agent with the national real estate brokerage Redfin, says some homebuyers include so many inspection-related contingencies that it can scare off the seller and his or her agent. “Some buyers are nervous, so they’re looking for extra ways to change their mind and walk away,” he says. “You can write a competitive offer without all these extra things and leave yourself a couple of ways to get out.” He suggests talking to your agent before submitting the offer, so you’ll feel confident your interests are protected.

7. Getting too attached to one property. In competitive markets, you may have to put in offers on several properties before one is accepted. Alderfer says some buyers get so infatuated with one property that a rejected offer hits them hard. “It’s OK to feel anxious, but you need to be able to fall in and out of love during a home search,” he says. “If you find a home that you think is perfect for you and you don’t get it, you can’t stay down too long. You have to recognize that wasn’t the house for you.”

Originally published on Yahoo News from US News and World Report

Rent? or Buy! – The cost is going up

Buy vs Rent“Yet another indication of what is coming in 2014.  The expert all agree that it will get more expensive to buy a home the further we go into the year.  Read this article and then click on the link at the end to use the calculators and see what makes sense for you.”

DC Metro Realty Team – Denise Buck & Ed Johnson

Whether you continue to rent or decide to buy a home, according to recent Zillow 2014 housing projections, the cost is going up. Zillow projects home prices to increase nationally by 3%, mortgages to rise to 5% interest rate by the end of the year and rents to go up by 2.5% on average.

If it will cost a person more whether they rent or buy, the conclusion can be made that one way or the other, they will pay for the house they occupy. The question will be whether they buy it for themselves or their landlord? Will they benefit from the equity build-up and the appreciation?

The following analysis looks at a $200,000 home that can be purchased with a 30 year FHA mortgage at 4.3%. The assumption uses 3% appreciation and tenant currently paying $1,750 a month in rent.

The house payment, principal, interest, taxes and insurance would be about $1,609 a month. However, once you consider the benefits of the principal reduction each month, the appreciation and the tax savings and the increased cost of maintenance, the net cost of housing is closer to $630 per month.

Even if you ignored the tax savings, the net cost of housing would only be $919.06 per month. The tenant would pay considerably more to rent than to own the home. Over time, the decision to buy a home could result in a considerable financial asset that the tenant will not benefit from.

To estimate your cost of housing, use the Rent vs. Own.

5 Things You Should Know About VA Loans

“Working in the DC Metro area we deal with VA Loans on a regular basis.  They are truly a wonderful tool to use when buying a home.  Even though everyone who is eligible to use one knows who they are, there are many aspects about VA Loans that people just aren’t aware of.  This article helps educate home buyers on several special aspects of the program.”

DC Metro Realty Team – Denise Buck & Ed Johnson 

VA loans are the most misunderstood mortgage program in America. Industry professionals and consumers often receive incorrect data when they inquire about them. In fact, misconceptions about the government guaranteed home loan program are so prevalent that a recent VA survey found that approximately half of all military veterans do not understand it.

With this in mind, we would like to debunk the most common myths about VA Loans.

Myth 1: The VA loan benefit has a “one time” use.

Fact: Veterans and active duty military can use the VA loan many times. There is a limit to the borrower’s entitlement. The entitlement is the amount of loan the VA will guarantee. If the borrower exceeds their entitlement, they may have to make a down payment. Never the less, there are no limitations on how many times a Veteran or Active Duty Service Member can get a VA loan.

Myth 2: VA home loan benefits expire if they are not used.

Fact: For eligible participants, VA mortgage benefits never expire. This myth stems from confusion over the veteran benefit for education. Typically, the Montgomery GI Bill benefits expire 10 years after discharge.

Myth 3: A borrower can only have one VA loan at a time.

Fact: You can have two (or more) VA loans out at the same time as long as you have not exceeded your maximum entitlement and eligibility. In order to have more than one VA loan, the borrower must be able to afford both payments and sufficient entitlement is required. If the borrower exceeds their entitlement, they may be required to make a down payment.

Myth 4: If you have a VA loan, you cannot lease the home.

Fact: By law, homeowners with VA loans may rent out their home. If the home is located in a non-rental subdivision, the VA will not guarantee the loan. If the home is located in a subdivision (such as a co-op) where the other owners can deny or approve a tenant, the VA will not approve the financing. When an individual applies for a VA loan, they certify that they intend on making the home their primary residence. Borrowers cannot use their VA benefits to buy property for rental purposes except if they are using their benefits to buy a duplex, triplex or fourplex. Under these circumstances, the borrower must certify that they will occupy one of the units.

Myth 5: If a borrower has a short sale or foreclosure on a VA loan, they cannot have another VA loan.

Fact: If a borrower has a claim on their entitlement, they will still be able to get another VA loan, but the maximum amount they would otherwise qualify for may be less. For example, Mr. Smith had a home with a $100,000 VA loan that foreclosed in 2012. If Mr. Smith buys a home in a low cost area, he will have enough remaining eligibility for a $317,000 purchase with $0 money down. If he did not have the foreclosure, he would have been able to obtain another VA loan up to $417,000 with no money down payment.

Veterans and Active duty military deserve affordable home ownership. In recent years, the VA loan made up roughly 13% of all home purchase financing. This program remains underused largely because of misinformation. By separating facts from myth, more of America’s military would be able to realize their own American Dream.

This article originally posted by Keeping Current Matters. Read more articles like this at www.KCMblog.com.