Benefits of Buying

Renting is overrated. The money is being thrown into the wind while your landlord is rolling in your hard earned cash and paying off their mortgage while telling you they’ll get to that leak under the sink “soon.” I remember renting one year when I didn’t even see the landlord. I couldn’t tell you what they looked like. My dishwasher was broken and the maintenance man told us to not use our health hazard heater because it was outdated. Needless to say it was a cold winter and we moved out of there quickly as possible. Does this sound like a familiar situation? Then you may be ready to sail into the sea of ownership where you are the Captain and that ship is under your control.

Buying a home comes with certain freedoms. One of those freedoms is not having a landlord. You are able to paint, hang wall art, and landscape as you please without the risk of not getting a deposit back. There are no noise restrictions, pet deposits, or remodeling. Butters, the hound, can run and be free in his house without his human worrying about what the landlord will say about his accident on the carpet. Renting stifles this ability to truly make a space your own. A home is yours to customize into a beautiful space that mirrors your personality with no guilt.


MB_0064_17AugB10-1-taxes

Taxes are a big stressor. Who doesn’t want a little relief when April comes around? Homeowners are offered several tax breaks. Some of those include Mortgage Interest, Tax and Penalty Free IRA, Home Improvements, Energy Credits, Home Equity Loans, and Real Estate Taxes. There is even a Home Office credit if you work from home. So many deductions, so little stress.

A homeowner’s net worth is 45 times that of an average renter. While rent is never recovered, mortgage payments build equity. It is an investment in the future by increasing an individual’s net worth. Not to mention it is cheaper to buy than rent. The average mortgage is lower than a rental payment and over time the interest portion of the mortgage payment decreases therefore the interest that you pay will be lower than a rental cost.


MB_0064_17AugB10-2-dog

Having a home in a neighborhood provides a sense of community. You know your neighbors. You know where your children will grow up and go to school. You know that you can walk your dog every night with a peace of mind. One doesn’t always get that when renting because you never know when the rent may be raised depending on your lease. You may not even be able to renew your lease when the time comes. Community is a sense of stability and security.

Free yourself of the waves of rent, buy your dream boat.

 


Come to our First Time Home Buyers Workshop if you would like to learn more on August 26th:

MB-0054-1st Time Home Buyer SM_fb

 

MB_LOGO_STACKED-GRY-GOLD

 

Advertisements

Mortgage Forbearance: the what, when, & how!

What it is

Forbearance isn’t a free pass; nor is it a one-size-fits-all solution. It’s an individual agreement between lender and borrower to provide some short-term relief. The forbearance period is something you negotiate with the lender—it can last from a month to a year, although the average is three to four months. The idea is to cut borrowers some slack until they can resume paying the original mortgage as usual.

“Our primary goal is to help delinquent borrowers avoid foreclosure and stay in their homes,” says Brad German, a spokesman for the Federal Home Loan Mortgage Corp. (Freddie Mac), which purchases home loans from lenders.

When to act

Immediately! The first and most important step in seeking forbearance is to contact your lender the minute you know you won’t be able to make a payment. The worst thing you can do is to stop paying, hide your head in the sand, and pray the lender won’t notice. Not only will the lender notice, it’ll report late payments to credit bureaus, and be less likely to extend forbearance if you ask for it.

“As long as you’re the one calling and telling them there’s a problem, the lender will most likely work with you,” says Kevin Lynch, assistant professor of insurance at the American College for Financial Services in Bryn Mawr, PA. “If you just quit paying your bills, and they have to call you, it’s cast in an entirely different light. And that light will not be favorable.”

What to say

Tell the truth—Family medical crisis? Job layoff?—and provide as much detail and proof that your lender requires. From there, the lender may agree to extend forbearance, but perhaps not off the bat before you discuss other options first.

Most lenders prefer to offer a loan modification that permanently reduces your monthly payments, often for a lower interest rate, but stretches your loan over a longer period of time. Or, if you’ve fallen behind on your mortgage but can now resume regular payments, a lender may agree to a repayment plan where a portion of the overdue mortgage amount is added to your regular payments until you catch up. Freddie Mac reports that in 2015, its participating members structured 6,000 mortgage forbearances, compared with 21,000 repayment plans and 54,000 loan modifications. The type of mortgage help you get depends on the duration of your hardship and what your particular lender is willing to offer.

If the lender offers forbearance, you both will agree to the length of the forbearance period, the amount of a reduced payment, and the eventual terms of repayment. Though tempting, don’t ask for more forbearance time than you need, but also don’t agree to less time than you think it will take to get back on your feet.

What happens once your time is up?

After the forbearance or the extension has ended, you’ll have to repay the amount that was suspended or reduced—principal, interest, taxes, insurance. Typically, no extra interest is charged on the payments you missed. You can make a one-time payment for the amount due, or add on payments to your regular mortgage until you’re up to date. If the hardship continues, some lenders will extend the forbearance for a few more months, or else you can “cure” the past due amount by modifying your loan. Most often, the loans are modified, says German.

What does forbearance do to your credit?

Nothing, according to FICO—the software company that creates algorithms that credit bureaus use to determine how creditworthy you are.

“Generally, forbearance is not likely to have any impact on the credit score,” says Ethan Dornhelm, a FICO senior director of model development. Lenders may (or may not) report to credit companies the existence of a mortgage forbearance, but it definitely does not wreck your credit like being delinquent on a mortgage. All told, it could be just the timeout you need to get back on your feet.