Date Archives: May 2013

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May
23

If you're applying for a mortgage for the first time, it may feel like you're learning a second language. All of the terms and regulations can seem daunting. One that doesn't need to be is "amortization," which is just the act of paying off debt in regular installments over a period of time. "When you amortize a loan you basically pay off the principal by making regular installment payments," says Michael LitznerBroker of Century 21 American Homes, who explains that this process typically takes place gradually over several years. Another term you may be hearing is "negative amortization." What is the difference? When your monthly payment isn't enough to cover the loan interest, then your loan principal increases rather than decreases. This is called negative amortization, otherwise referred to as "deferred interest." Monthly Payment Chart for Loans "Negative Amortization causes the loan balance to increase rather than decrease," says Litzner.  This often happens with adjustable rate mortgages (ARMs). Negative amortization has to be repaid, which means your payment will rise in the future. "The larger the negative amortization, the more you will be required to amortize the loan in full," says Litzner. So you may be wondering, why would anyone use a negative amortization loan? "The main reason people use negative amortization loans is to lower monthly payments," explains Litzner. "Some homeowners use loans with negative amortization to purchase a house they otherwise can't afford, resting on the idea that in the future, they will have more income and can make larger payments." "With negative amortization, a persistent rise in interest rates reduces the equity in the house unless the negative amortization is offset by house appreciation," saysLitzner. As a result, some use negative amortization if they believe that the house will be worth much more in the near future. For more information on home ownership, please contact Century 21 American Homes at 800-270-6318. Century 21 American Homes is one of the fastest growing real estate brokerages serving Long Island, Queens and Brooklyn. To find out more about an exciting career in real estate contact us at careers@c21amhomes.com.
May
22

Spring is the hottest home buying season, and this year, we are beginning to see a market shift, says Michael Litzner, Broker of Century 21 American Homes. Once a buyer's dream, the market is now shifting back toward the seller's side. What does this mean for you, the buyer? If you are looking for a new home this spring and summer, you may be in for a little competition. Don't let this deter you. In order to get your dream home for your dream price, become the best possible buyer you can be-before you even begin looking. This way, when you are dealing with a seller, you will have all of your ducks in a row, and they will take your offer seriously. Below are Litzner's tips for becoming a better buyer. Be pre-approved. "Many sellers won't even consider buyers who aren't already pre-approved for a mortgage, so do yourself a favor and take care of this before you even begin hunting," says Litzner. Understand your credit score. It's not just enough to know your credit score. Thoroughly understand it, and know what it means for your lending status. And don't just stop with one credit report. "Most lenders pull scores from all three major credit bureaus, so make sure you do the same so you're familiar with the same numbers," suggests Litzner. Look past your credit score. Now that you've got a solid handle on your credit, move forward. It's not the be-all and end-all. Lenders will focus on other things as well, such as your income, your debt-to-income ratio, and how much of a down payment you plan on putting forward. Which brings us to… How much down payment can you afford? A lender will be more eager to approve you if you can put down a larger down payment. How much is enough? Litzner suggests having at least 20 percent of the purchase cost on hand. j0341925 Can you do cash? While it may be a stretch for some, being able to make your offer in cash will make you a dream buyer. So if you can swing it, then this may be the way to go in order to surpass competition. For more information on buying a home, please contact Century 21 American Homes at 1-800-270-6318. Century 21 American Homes is one of the fastest growing real estate brokerages serving Long Island, Queens and Brooklyn. To find out more about an exciting career in real estate contact us at careers@c21amhomes.com.
May
15

If you've been thinking about buying a home, renovating, and selling-also known as house flipping-then you may have a lot buzzing through your brain right now. The market is ripe with investment opportunities, and if you do the research, you can still snag a real deal on a fixer upper. Below,Michael LitznerBroker of Century 21 American Homes outlines what you need to know about house flipping before you sign any dotted lines. Do Your Research Don't just pick up the first property that catches your eye. "Compare houses, prices and markets just like you would if you were buying a primary property," says Litzner. Crunch NumbersHand Holding Paper House Made of Euro Notes Talk to someone with experience flipping homes, and really bite into the numbers before you make an offer. Scrutinize your budget. How much can you sink into a home? How much do you think the home needs before it will be ready for resale? How much do you think you can get for it? Will it be worth the time and effort? Give Yourself Time "House flipping can be a timely endeavor, especially in today's market," Litzner reminds us. "And even if you renovate quickly, there is no guarantee you will sell quickly." If you have to work under pressure for any reason at all, then now may not be the time for a project like this. Have Cash Banks are tighter with their loans these days, so if you plan on buying an investment property, plan on having a sizable part of the down payment ready to fork over. This will show lenders you're serious. Have enough cash to forgo the lender all together? Even better. "Sellers love cash buyers, and you may be able to get a better price if you can pay it all up front," explains Litzner. Location, Location, Location. Before you buy the house down the street from your own, research where folks are buying right now, and scrutinize local markets. "Keep an eye out for cities where the markets are on the rise-not stagnant-so that when your property is ready for resale, someone will be ready to buy it," Litzner suggests. Pick Renovations Carefully You may want to fix the house up from soup to nuts. But before you start working on that private screening theatre in the basement, tackle renovations with the largest return on investments. "A nice kitchen, up-to-date bathrooms and decent-sized bedrooms are good bets when renovating for sale," says Litzner. "And of course, make sure the roof is in good condition and the foundation isn't crumbling." That Jacuzzi tub won't make buyers overlook the cracked basement walls. For more information on house flipping, please contact Century 21 American Homes at 1-800-270-6318. Century 21 American Homes is one of the fastest growing real estate brokerages serving Long Island, Queens and Brooklyn. To find out more about an exciting career in real estate contact us at careers@c21amhomes.com.
May
7

Traditionally, spring marks a busy period of time for housing market activity. With the heat of summer seemingly only weeks away, first-time homebuyers should learn strategies for finding their ideal home while keeping financial priorities in check. Buying a home can be the largest and most important financial decision one can make, so it is important to be aware of all the factors that go into making a responsible purchasing decision. The first step is figuring out how much you can afford to spend on homeownership, which means an honest assessment of the household balance sheet. Once you have a clear idea of where you stand financially, you can then make a responsible decision of what you can afford, including your down payment, monthly mortgage costs and other expenses like utility costs, property insurance and taxes. Here are a few tips: Making an affordability assessment Housing costs, including mortgage payments, property insurance and taxes, should not take up more than one-third of your income. In addition to this, servicing your overall debt, including loans, utilities, credit card payments and lines of credit, should not account for more than 40 percent. If you can land safely within these parameters, then homeownership is an affordable and realistic option. Coming up with the down payment In general, the bigger the down payment you come up with, the less interest you'll pay over the life of your mortgage. Financial institutions may offer special accounts designed to help you save for that first home. Consider opening a savings account specifically to fund your down payment. One easy way to save is to set up an automatic monthly deposit from your checking account to your savings account, allowing you to build the balance over time. Escrow Choosing the right mortgage for you Your mortgage needs to fit in with the rest of your financial priorities -- which could mean increased flexibility or security. Consider the following when choosing your mortgage: • Choose a shorter amortization period - In general, the shorter the life of the mortgage, the lower the overall interest cost. Consider choosing a 20-year amortization rather than a 30-year amortization to save you money on interest costs and help you become debt-free sooner. • Fixed vs. variable - Variable-rate mortgages have been a winning strategy over the long term, but fixed rate mortgages (currently at historic lows) provide cost certainty and peace of mind. • Stress-test your mortgage payments - Use a mortgage payment based on a higher rate to stress-test your budget; total housing costs (mortgage payments, property taxes and insurance, etc.) should not consume more than one-third of household income. Applying for pre-approval A pre-approval establishes the amount you can reasonably afford to borrow towards the purchase of your first home. Consider the following benefits to getting pre-approved: • Have a good idea of your finances - You will receive a better idea of how much you are qualified to borrow, saving time looking at homes that meet your affordability range. Your term and amortization, as well as estimated monthly payments, are provided at approval so you can use these figures when planning your overall budget. • Moving quickly - If you are pre-approved for a mortgage, you'll be able to move quickly to make an offer when you finally find the perfect home for you.
May
2

Findings from a recent Apartments.com survey reveal it is more likely renters could be living next door to a pet owner compared to recent years. This year, 75 percent of renters surveyed said they are pet owners, compared to 43 percent in 2012. These findings align with the improving U.S. economy, according to an American Veterinary Medical Association survey released last year; the difficult economy played a very strong role in the first decline in pet ownership since 1991. Half of the pet-loving renters surveyed by Apartments.com would like to believe their fellow apartment residents also adore their four-legged companions. Fortunately, it turns out they are not far off, as nearly 60 percent of renters who do not own pets said they still enjoy living around others with pets. While nearly 65 percent of the pet owners surveyed said they live in a two-bedroom apartment or larger, many indicated they were ambivalent to the size of their space when choosing a pet. In fact, more than 75 percent said the size of their apartment only played "some importance" to "no difference" when picking a pet. The five most popular apartment pets among the pet owners surveyed are: Ally Dog2
  1. Cat: 45 percent
  2. Small dog: 38 percent
  3. Medium dog: 21 percent
  4. Large dog: 19 percent
  5. Fish: 6 percent
  Budget-savvy renters should plan for costs associated with living with pets, as 63 percent of pet owners indicated they are required to pay a pet deposit. In fact, a majority spend more than $150 annually in deposits and/or monthly fees. However, deposits and fees do not always cover every type of pet. Renters should be specific in clarifying what types of pets are allowed, as pet restrictions vary from one apartment building to another. In fact, only 28 percent of renters surveyed said they live in a building that has no restrictions on what type of pet they are allowed to have. The survey also reveals nearly seven out of 10 respondents adopted their pet from a rescue or shelter. As part of this survey, Apartments.com committed to donating $1 for every survey response to North Shore Animal League America, the world's largest no-kill animal rescue and adoption organization.

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