The Real Reason Your Client’s Offer Was Rejected

Sometimes even the most attractive offers still fall short, and explaining why can be a tough part of your job. Here are four scenarios that might help you become a better adviser in the negotiation process.

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4 Financial Lessons Boomers Can Teach Millennials

Younger buyers are on a better financial path than most people assume, and they’ll continue to be if they don’t make the same missteps as previous generations.

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Some Not-So-Tiny Obstacles in the Growing Market for Tiny Houses

(TNS)—When Tom Alsani heard about plans for a tiny-home community in St. Petersburg, Fla., he got so excited he immediately wanted to know more.

“Right now I have a house with three bedrooms, but the kids are gone and I’m trying to downsize,” says Alsani, a quality-control inspector for furniture companies. “To me, a tiny house is very, very attractive. It’s a state of mind; it’s not about how big you have it but the level of contentment and happiness.”

Few housing options have captured the public imagination like tiny houses, seen as an affordable and, yes, adorable antidote to the excesses of modern life. Their appeal is wide—to empty nesters like Alsani, soon to be retired and living on Social Security, to millennials, too burdened with student loan debt to buy a normal-size house, and to vagabonds at heart who like the idea of packing up and hitting the road at a moment’s notice.

But for all the enthusiasm, the tiny house movement isn’t moving very fast. Financing, zoning laws and entrenched attitudes have conspired to limit tiny houses to a tiny percentage of the nation’s housing stock.

“With tiny homes, because it has a new name and is not called an RV or a mobile home, people don’t know how to treat it,” says Preston Melson, a partner in a St. Petersburg company that makes tiny houses.

Today, though, “tiny house” typically means a dwelling of 400 square feet or less on wheels. While the mobility is attractive, it has impeded the widespread acceptance of tiny homes.

Legally, wheeled houses are considered recreational vehicles and are generally restricted to RV parks by county and municipal zoning laws. Many so-called “tiny homers” don’t want to live in RV parks, however, because they cater primarily to vacationers, not permanent residents.

Owners who don’t plan to move their tiny homes can build them as permanent structures on vacant land where zoning permits; thus, the challenge of tiny houses “is where to put them,” Melson says. “That’s the No. 1 enemy.”

Paying for tiny houses is getting easier. Since 2013, SunTrust’s LightStream division has offered tiny-home loans—actually, personal, non-secured loans of up to $100,000—for as long as seven years. Interest rates range from 4.04 percent to 11.04 percent, depending on the borrower’s credit history. (The minimum score is 660, and the applicant must have some assets like a 401(k) or stock.)

Though it has fewer borrowers than for car and home improvement loans, the market for tiny-home loans “punches above its weight,” says Julie Olian, LightStream’s vice president of Public Relations. “Our portfolio has grown as the market has increased. It’s a great way to get a first home and it’s one that’s flexible in terms of where it is [located].”

©2018 Tampa Bay Times (St. Petersburg, Fla.)
Distributed by Tribune Content Agency, LLC

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Minutes, or Money? Homeowners Save by Trading Off Travel to Work

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In city cores, commuting from farther out takes time, but can save thousands, according to an analysis newly released by Zillow.

In Boston, there is a 13.4 percent difference in home prices, typically, between the center of the city and locales 15 minutes out—the highest rate of savings, and totaling $57,260. In Seattle, the difference is 11.3 percent, or $54,599; in Washington, D.C., the difference is 9.4 percent, or $37,709. The analysis factored in 34 of the largest metros, in conjunction with HERE Technologies, a city intelligence and mapping platform.

In approximately one-third of the cities examined, however, the opposite is true. Compared to downtown, homes are pricier in suburbs in Texas—Dallas-Fort Worth, Houston and San Antonio, specifically—and in Baltimore, Detroit and Sacramento. San Antonio has the highest premium rate, at 14.2 percent (translating to $27,509), and Dallas has the lowest, at 0.1 percent ($308).

Convenience costs—but according to Aaron Terrazas, senior economist at Zillow, 15 minutes daily equals five months over a lifetime. With affordability eroding, is shorter travel worth it?

“There has been an urban revival in many U.S. cities over the past two decades driven by evolving preferences among young adults and a long-term shift in the American economy toward service jobs, but, this does come with a cost,” says Terrazas. “In many cities, there’s a growing tradeoff between a short commute and an affordable home. The regular commute to and from work looms large over the typical American worker’s life. Over a 30-year career, reducing your one-way commute by just 15 minutes frees up five months of one’s life for more rewarding pursuits.

“For some home shoppers, it may be worth paying more to spend less time sitting in traffic, but for others, deteriorating mortgage affordability and lifestyle needs and wants make longer commutes a reality,” Terrazas says.

Across age groups, closer commutes are important. According to a January National Association of REALTORS® (NAR) survey, both millennials and the Silent Generation would live in an apartment or townhome if it meant less travel to work.

For more information, please visit www.zillow.com.

Suzanne De Vita is RISMedia’s online news editor. Email her your real estate news ideas at sdevita@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.

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Forget a Garage—Buyers Won’t Budge on High-Rated Schools

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Buyers have their eyes on schools, and with the irrefutable link between the quality of schools and values, a district with high ratings trumps all—even coveted features of a home, according to a new realtor.com® survey.

To get into their desired district, 78 percent of the homebuyers surveyed had to let go of something on their wish list. When asked what they would compromise on, approximately one-fifth (19 percent) of respondents would forgo a garage, while 17 percent would go without a kitchen that has been remodeled. Another 17 percent would settle for less bedrooms.

Being within an in-demand district is “important” to 73 percent of respondents to the survey, and even more so to those with children, and those who are younger. What are the characteristics of a “good” school? Accelerated programs, arts and music and diversity are all factors, but the most important is test scores, according to the survey.

“Most buyers understand that they may not be able to find a home that covers every single item on their wish list, but our survey shows that school districts are an area where many buyers aren’t willing to compromise,” says Danielle Hale, chief economist at realtor.com. “For many buyers, ‘location, location, location,’ means ‘schools, schools, schools.’”

Generally, homes in proximity to sought-after schools move quicker than others, and are pricier.

For more information, please visit www.realtor.com.

DeVita_Suzanne_60x60Suzanne De Vita is RISMedia’s online news editor. Email her your real estate news ideas at sdevita@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.

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Don’t Know Your Mortgage Rate? You Could Be Costing Yourself Thousands

(TNS)—Not knowing your mortgage rate can be an expensive mistake, especially in this rising interest rate market. Yet nearly three in 10 mortgage holders (29 percent) either didn’t know their mortgage rate or wouldn’t say, according to a survey by Bankrate.

This is a big problem, says Martin Choy, operations manager at Westwood Mortgage in Seattle.

“Most homeowners should know what their rate is. If they have an adjustable rate mortgage [ARM], then they should contact their lender immediately and get their current rate,” Choy says.

Rates Are Climbing, so Borrowers Should Act Now
As rates continue to rise, this could be your last chance for many years to lock in a lower rate.

“During the big boom, before this last election, we could refinance mortgages at no cost because the rates were so low, but now the rates are heading up,” Choy says.

The average rates on 30-, 15- and 10-year fixed refinances have risen from a year ago, according to Bankrate’s weekly survey of large lenders. The benchmark 30-year fixed-rate mortgage rose to 4.70 percent (as of July 11, 2018) from 4.13 percent a year earlier.

A $200,000 mortgage with a 4.70 percent interest rate costs $119 a month more in interest than the same mortgage with a 4.13 percent rate. As rates and mortgage amounts go up, the impact on your bottom line increases. Over time, this difference in rates can cost you thousands of dollars.

Good Candidates for Refinancing
When you refinance your mortgage, you pay off the remaining balance on your current loan and get a new one. You can get a new rate, new terms, or a new rate and new terms. You can get a cash-out refinance where you tap into the equity to extract cash and then get a new mortgage. You can even pay money in and take out a smaller mortgage.

Those with adjustable-rate mortgages may be good candidates for refinancing. As mortgage rates climb, so will your monthly payments. If you lock in a fixed-rate mortgage now, you may be able to save thousands of dollars later.

The same is true for people with high-rate mortgages who have since improved their credit.

“There are many variables in determining whether refinancing is a good option,” says Choy. “How much do you owe? How much is your house appraised for? Is your credit score good? If you’re in better financial shape now, both with your monthly debt ratio and credit score than when you got your mortgage, then you could qualify for better rates.”

Today, most people aren’t getting ARMs because the rates are about the same as fixed-rate mortgages, says Choy.

“It’s always better to get a fixed-rate loan than an ARM when interest rates are equal. Now is a good time to refinance an ARM before rates get even higher.”

Cash-Out Refinance Options
If you have outstanding higher-rate consumer debt and an above-market mortgage interest rate, a cash-out refinance might be a good option. That way you can consolidate all the debt into one presumably more affordable monthly payment.

Not only are mortgage rates rising; so are interest rates for credit card debt. Because credit card interest rates follow in lockstep with mortgage rates, people with credit card debt might be looking at higher monthly payments.

“With a cash-out refi, you can use that money to pay off debt and get a new mortgage with better rates. That is an option for some homeowners,” says Choy.

What Does Refinancing Cost?
Refinancing fees vary by lender and state, so be sure to shop around for specific costs. Bankrate’s mortgage rate tables are a good place to start looking at rates in your area. Calculate when you’ll break even on the new mortgage by taking into account the costs of refinancing and any prepayment penalty for paying off your mortgage early.

On average, borrowers can expect to pay between 3 and 6 percent of their balance in refinancing fees. Costs might include:

  • Application fee: This charge varies by lender and is used to cover processing your application and credit report. The cost ranges from $75-$300.
  • Loan origination fee: The lender charges this fee for preparing your loan. This may be between 0 percent and 1.5 percent of the loan principal.
  • Points: You might pay loan-discount points, which is a one-time fee for reducing the interest rate on your loan. Each point is equal to 1 percent of the amount of your mortgage. There is another point-based fee charged by lenders to earn money on the loan. This latter fee of up to 3 percent of the loan principal can sometimes be negotiated.

Other fees might include:

  • Appraisal fee
  • Title search/title insurance
  • FHA, RDS or VA fees or PMI
  • Homeowner’s insurance
  • Attorney review
  • Inspection
  • Surveys

Sometimes these fees can be rolled into your new mortgage, or the lender will pay them in exchange for a higher interest rate. Refinances that don’t require borrowers to pay these up-front fees are known as “no-cost” refinancing.

©2018 Bankrate.com
Distributed by Tribune Content Agency, LLC

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Federal Court Says FHFA Structure Is Unconstitutional

Judges say the Federal Housing Finance Agency, which is run by a single director, is “unconstitutionally insulated from executive control.”

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What Is a Jumbo Mortgage and When Do You Need One?

(TNS)—Home prices have shot up in some areas of the U.S., to the point where buyers need jumbo loans to finance them. In mortgage-speak, jumbo refers to loans that exceed the limits set by the government-sponsored enterprises (GSEs) that buy most home loans and package them for investors.

Jumbo mortgages, or jumbo loans, are those that exceed the dollar amount loan-servicing limits put in place by GSEs Freddie Mac and Fannie Mae. This makes them non-conforming loans.

As of 2018, these limits are $453,100 in all states except for Alaska, Guam, Hawaii and the U.S. Virgin Islands, where the limit is $679,650. The conforming limit is higher in counties with higher home prices, so be sure to check your area’s loan limits.

The maximum loan amount varies by lender. Borrowers can get fixed- or adjustable-rate jumbo mortgages with various term options. The mortgages can be used for primary homes, as well as for investment properties and vacation homes.

How to Qualify for a Jumbo Mortgage
Jumbo lenders usually have stricter underwriting guidelines. The main reason for this is that they’re not backed by Fannie or Freddie, so they’re riskier loans. On the flip side, lenders have more to gain since the dollar value is higher and they can offer additional services to these wealthier customers.

The three common hurdles borrowers must clear to get jumbo loan approval are larger income, higher credit scores and greater reserves, says Robert Cohan, president of Carlyle Financial in San Francisco.

“To consider a jumbo loan the FICO scores have to be higher. The average is around 740, although I have seen some as low as 660,” Cohan says.

Borrowers whose scores fall beneath the normal requirements usually have to offset it with a low debt-to-income ratio.

“If you’re high-leveraged and you have a low credit score, it’s going to be hard to get a jumbo loan,” Cohan says.

Borrowers should be prepared to show enough reserves, or assets, to cover between six and 12 months’ worth of mortgage payments. The down payment on jumbo loans is, on average, between 10 and 20 percent.

“Anything lower than a 10 percent down payment and you’re probably going to pay for it in higher rates,” Cohan says.

What Are the Benefits of a Jumbo Mortgage?
The main benefit for borrowers is that a jumbo mortgage allows them to go outside of Fannie and Freddie limitations. You can still get a competitive interest rate and finance the home of your choice without being restricted by the dollar limit on conforming mortgages.

The rates on jumbo mortgages fluctuate and may be higher or lower than the conforming mortgage rate. Recently, a 30-year jumbo rate was 4.62 percent, eight basis points lower than a conventional 30-year fixed rate of 4.71 percent.

Jumbo loans are a convenient way to finance property. Instead of getting two conforming loans to finance a home, the jumbo option eliminates that need. Some borrowers prefer to finance more of the home’s cost rather than tying up cash, making the jumbo mortgages a helpful financial tool.

©2018 Bankrate.com
Distributed by Tribune Content Agency, LLC

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Partnering IRA Funds: An Alternative Way to Fund Your Real Estate Investment

Did you know you can partner with other funding sources to increase your investment potential? Self-directed IRAs are the only retirement arrangements that allow individual investors the freedom to pursue alternative investments, such as real estate. Investing in real estate with a self-directed IRA offers many benefits to those who are looking for creative ways to save for the future. Investors have complete control over their investment choices. Unlike other IRAs, you’re not limited to stock, bonds or mutual funds. Self-directed IRAs provide the opportunity to save money for the future on a tax-deferred or tax-free basis. In addition, an IRA is considered a separate entity that can conduct business with others. This is a common strategy used in real estate investments. The process is fairly simple, but be sure to adhere to IRA regulations to avoid engaging in any prohibited transactions.

How do I partner with others to purchase real estate using a self-directed IRA?

  1. Identify the partner you would like to invest with.
  2. Perform your due diligence and confirm that the investment fits your strategy.
  3. Combine your self-directed IRA fund with other funds to purchase the property.
  4. Your IRA will own a percentage of the property and must be stated on the title when the transaction is recorded.
  5. All income and expenses (on a proportionate basis) from the property flow in and out of your IRA and not your personal finances.
  6. If the property is sold, your IRA receives the portion of the proceeds proportionate to the percentage of ownership.

A self-directed IRA can partner with anyone at the time of initial purchase, but after the transaction is complete, the IRA cannot conduct any business with a disqualified person. Doing this could lead to significant tax penalties.

The following people are considered disqualified persons:

  • You
  • Your spouse
  • Your lineal ascendants and descendants, and their spouses
  • Any person providing plan-related services (custodians, advisors, fiduciaries, administrators)
  • Any entity (business, corporation, partnership) of which you own at least 50 percent, whether directly or indirectly

What are the ways in which I can take advantage of the partnering strategy to help me save for retirement?

  1. Partner With Another Investor
    Investors are on the lookout for new opportunities, and networking with like-minded individuals can be a great way to find an investment partner. Partnering with a fellow investor offers the potential to learn from each other, as well as disperse risk between two people.
  1. Partner With a Relative
    While you are not allowed to buy from/sell to relatives, as they are considered disqualified persons for these purposes, you do have the option of partnering with them to purchase a new investment. This can be a great way to save for retirement together with a loved one.
  1. Partner With Yourself
    It is possible to partner your self-directed IRA funds with your personal savings for the purchase of a new asset, such as a real estate property.
  1. Partner With Another Self-Directed IRA
    Partner your account funds with the funds in another IRA to maximize your purchasing power. Find another motivated retirement investor to explore your possibilities.
  1. Partner With a Group
    Sometimes partnering with one account, one investor or only yourself will not provide enough funding for the investment you are interested in. In this case, you can partner with a group! Partnering can be a great tool for retirement investing, but it is important that you understand how to utilize this strategy for success.

It’s Easy to Get Started
All you have to do to get started is open an account and fund it. There are three ways to fund your self-directed IRA: transfer or rollover an existing retirement account, such as an employer’s 401(k), into a self-directed IRA; or make regular, annual contributions to your account. Once your account has cash in it, you can start investing immediately! As you read in this article, you can partner with other investors until you have enough cash to invest in real estate on your own. Download our free report about partnering your self-directed IRA with real estate here to learn more.

Disclaimer: Before you invest in this business sector using your IRA, it is best to consult with your investment, legal and tax advisor. Entrust does not endorse or recommend any of these investments. Proper due diligence by you, the IRA holder, is recommended before entering into any transaction.

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Furniture And Home Decor Deals To Shop This Amazon Prime Day

Up to 30 percent off on home decor and furniture finds. Continue Reading →