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Tips to Achieve Your Full Potential Equity

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The real estate market is constantly evolving, presenting homeowners with challenges in determining the accurate value of their properties. In today's era of rapid fluctuations, it is essential to equip yourself with the right knowledge and tools to make informed pricing decisions. There are three crucial factors to consider when assessing your home's worth.

Online estimators offer a convenient starting point for obtaining a rough estimate of your home's value. While they may not provide pinpoint accuracy, these tools, readily available on reputable real estate agents' websites and portals, can provide a general idea of where your property stands in the market.

Traditionally, real estate professionals would consider comparative home sales data from the past six months. However, the current market volatility demands a shift towards using more recent comps. Notably, 2022 and 2023 witnessed a significant doubling of mortgage interest rates within a six-month span, causing home prices to respond accordingly. To ensure accurate pricing, it is crucial to work with a seasoned real estate agent who can identify and leverage the most recent comparable sales.

While research and analysis are valuable, nothing compares to the expertise of a professional real estate team. Their experience and training enable them to price your home accurately from the outset. A skilled agent can identify the key amenities and upgrades that will yield the highest return on investment, as well as develop a tailored marketing plan to outshine competitors.

Evaluating the obvious and the subtle differences between your home and the comparable sales can make the difference in achieving your full potential equity in the least market time with the fewest deterrents or not.

In the ever-changing real estate market, determining your home's value requires a multifaceted approach. By utilizing reliable online tools, considering recent comps, and collaborating with an experienced real estate team, you can confidently navigate the dynamic market and price your home appropriately. If you have any questions or need assistance with real estate matters, please feel free to reach out to me. I am here to serve as your dedicated resource for all your real estate needs.

Owning a home is not only a place to live but also a valuable asset that can contribute to long-term wealth accumulation. Two key factors that play a vital role in increasing a homeowner's wealth are appreciation and amortization. Understanding how these factors work can provide homeowners with insights into building substantial financial equity over time.

Appreciation refers to the increase in the value of a property over time. Real estate markets tend to experience appreciation in the long run, although it can fluctuate in the short term. This appreciation can significantly benefit homeowners' wealth accumulation in several ways.

As a property appreciates, the homeowner's equity, which is the difference between the property value and the mortgage balance, increases. This equity serves as an asset that can be leveraged for future financial endeavors.

Capital Gains: When homeowners decide to sell their property, the appreciation becomes recognizable. The difference between the purchase price and the selling price results in a capital gain, which can be taxed at favorable rates. Homeowners benefit from an exclusion of up to $500,000 of capital gain for married taxpayers filing jointly.  If the gains exceed the exclusion, they are taxed at a lower capital gains rate.

Amortization refers to the gradual repayment of a mortgage loan over time. It is facilitated through monthly mortgage payments, which consist of both principal and interest. With each mortgage payment, a portion goes towards reducing the principal balance of the loan. This reduction in debt increases the homeowner's equity in the property, effectively building wealth over time.

Amortization acts as a form of forced savings. Homeowners are essentially paying themselves by building equity with each payment, rather than paying rent to a landlord. As the mortgage balance decreases, homeowners gain ownership of a more significant portion of the property, leading to increased wealth.

As equity grows, homeowners can access it through home equity loans or lines of credit, allowing them to invest in other ventures or make home improvements that can further enhance the value of their property.

Understanding the dynamics of appreciation and amortization is crucial for homeowners looking to accumulate wealth through their real estate investments whether it be a home or a rental. Appreciation allows for capital gains and the growth of equity, while amortization steadily reduces debt and builds equity over time. By leveraging these two factors effectively, homeowners can secure their financial future and take advantage of the long-term wealth-building potential of homeownership.

Turn Back Time

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As the expression goes, "if I could turn back time", maybe you'd would do some things differently.  If you're wanting to buy a home, the regret may come from not getting a mortgage when rates were half of what they are today.  There may not be a way to literally "turn back time" but you may still be able to get a mortgage with last years' rates.

Let's say a home was sold in the fall of 2021 for $350,000 with a 3% FHA loan.  Today, winter of 2023, the home is on the market for sale at $400,000.  There are buyers who have $40,000 for a down payment, who like the home, and want to purchase it.

At today's mortgage rate of 6.42%, the $360,000, 30-year mortgage payment would be $2,2565.54 for the principal and interest.  They have been looking for a year and in the past 12 months, the mortgage rates have doubled which will stretch their finances along with all the other inflationary pressures.

Their incredibly savvy agent has learned that the underlying mortgage is an FHA mortgage at 3.00% with a little less than 29 years remaining.  This loan could be assumed by an owner occupant at the current rate which would save the buyer a considerable amount of interest.

The problem is that the buyers do not have enough cash to buy the equity.  The unpaid balance is $328,902 which makes the equity about $71,000 which is more than the $40,000 they have available.

The agent believes that with the buyer using the $40,000, they should be able to get a second mortgage for the difference of $31,000.  While it may not be possible to get a 30-year term on the second, it may be possible to get a 30-year amortization on the payment and have the second loan due in ten years.

Sources for the second loan could be the borrower's local bank, a credit union, a relative or other investor not happy with what they're earning on cash in the current market.

This could save the buyer over $600 a month.  In addition to a lower payment, assumptions on FHA loans have lower closing costs, they're easier to qualify for, and the lower mortgage rates allow them to amortize faster than a higher rate mortgage.

 

Buyer Scenario #1 ... New Mortgage

 

Purchase Price

$400,000

10% Down Payment

$40,000

Mortgage at 6.42% for 30 years

$360,000

Principal & Interest Payment

$2,256.54

Future Value at 3% Appreciation in 7 years

$493,342

Future Unpaid Balance

$325,062

Future Equity

$168,280

 

 

Buyer Scenario #2 ... Assumption

 

Purchase Price

$400,000

10% Down Payment

$40,000

Assume Existing Mortgage at 3% for 28.8 Remaining Years

$328,871

Assume Principal & Interest Payment

$1,386.66

New Second Mortgage at 6.5% for 30 years

$31,098

Payment on Second Mortgage

$247.32

Total Monthly Payments

$1,633.94

Monthly Savings

$622.55

 

 

Future Value at 3% Appreciation in 7 years

$493,342

Unpaid Balance on 1st Mortgage in 7 years

$266,313

Unpaid Balance on 2nd Mortgage in 7 years

$35,379

Future Equity in 7 years

$191,649

Increased Equity Over New Mortgage

$23,369

 

In the early 1980s, both Fannie Mae and Freddie Mac added "due on sale" and escalation of interest rate clauses to the standard verbiage on notes and mortgages.  From a practical standpoint, this ended assumptions of most conventional mortgages. 

FHA and VA continued to be assumable by anyone, regardless of credit, until 12/1/86 and 3/1/88 respectively.  At that time, an owner-occupant could assume the existing interest rate but had to qualify to do so.  Mortgage rates went down over the next three decades with only some temporary increases until January 2022 when they began to increase dramatically.

If a buyer had to qualify to assume a mortgage, especially if it was higher than the current rates, there was no compelling reason to put more money down for an existing mortgage.  Now, in 2023, this environment has changed.

Many buyers who purchased using an FHA or VA mortgage in the past two to three years, benefitted from some of the lowest rates in over 50 years.   The equities in these properties are still within reason to either assume cash to equity or consider a second mortgage for part of the equity.

If you'd like to learn more about how to assume FHA, VA, or USDA mortgages at lower rates than currently available on new mortgages, contact your real estate professional.  Unfortunately, some agents are not aware of how assumptions work.  Give us a call and we can walk you through the process and even have a spreadsheet that will analyze the comparison for you.

Seller's

FIVE THINGS BUYERS SHOULDN’T COMPROMISE ON

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When buying a home, there are things you should never compromise on or you will likely regret it!

  1.  The Floor Plan:  It is difficult and expensive to reconfigure a homes floor plan.  If a home doesn’t have the minimum number of rooms or the flow of the main living areas you want, you should cross it off your list.
  2. The School District: You need to carefully consider your neighborhood’s school district and even get a map of the boundaries to make sure your home is within the correct district.
  3. The Neighbors:  Pay attention to the condition of neighboring homes.  Not only do you have to live with your neighbors on a daily basis, but it can affect your future resale value.  Knock on the doors and meet the neighbors prior to submitting an offer.
  4. The Budget:  Consider all expenses, monthly mortgage payment, homeowner association dues, utility costs and real estate taxes.  Beyond the sales price make sure you will be financially comfortable.
  5. The Commute:  Test-drive the route between your home and office to be certain of the time spent commuting.

Give us a call, we'd love to help you with your real estate needs!

Cindy Wood Realty

801-278-0999​​

 

Yes, Feds Reduced the Rates!

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Yes the feds cut interest-rates but how does this affect real estate loans? 

  • Mortgage rates are not tied to the federal reserve rate which is the overnight bank to bank borrowing rate.
  • Mortgage rates converse they are tied to the 10 year treasury bond. With that being said, that is a little market to say the least.
  • My best advice is to get a loan application submitted to your lender so that when your target rate arrives you can be prepared to jump and lock it quickly. This does not obligate you to anything but in the market like this the demand can overwhelm supply.
  • All that said it’s a great time to buy and sell real estate!! With today’s technology you can start shopping in the comfort of your own home!!

Give us a call with your questions!

Cindy Wood Realty Group

801-278-0999

When is it a good time to buy and sell?

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Image result for house with question mark

The most requested Real Estate question from my clients and friends is….

When is it a good time to buy and sell real estate in Utah?

There are may factors when making this decision and it is going to be different for everyone and depends on individual circumstances.  It is typically the largest money transaction you will ever make.  To help you make this decision you need to ask yourself many questions. 

  1. What is your motivation for moving?  Is it a need or a wish?
    1. A job move
    2. Family needs (yard, larger, downsizing)
  2. Is there a better time for your family? School break, summer vacation.
  3. How will it affect your family, including animals?
  4. Where will you move to?  Rent or purchase?
    1. Are you qualified for a move financially
  5. Have you checked on inventory where you are moving to?

Next, make a list of important items which are a must, along with a wish list.  Be clear on what you need verses what you want.  i.e. Number of bedrooms, square feet, schools, location, style etc.

After doing this, see how you feel.  Are you ready…..does it make sense and does it feel right.  Once you are ready, then the process begins.

Call us and we can help you go through this exercise and determine if it is the right time for you. Remember it’s all about you and your needs.

Cindy Wood Realty Group

801-278-0999

Top 5 Home Design Trends of 2017

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The current trends are all about utilizing rich color, maximizing texture and creating comfortable interiors you can’t wait to relax in. Use these trends to get inspired to makeover your home’s interiors and create spaces you love that also appeal to your personal style. Remember, if you plan to sell in the next few years, you may want to avoid doing anything dramatic and instead incorporate small changes that would appeal to buyers.

Why are these trends gaining popularity?

The underlying theme of these trends is creating a home environment you love; one that appeals to your emotions and feels like a retreat from the stresses of the world. Although the home is a place where you can relax and spend time with loved ones, work expectations are beginning to blur the line between work and home. Even if people don’t work from home specifically, many are stretching their work hours into their evenings and weekends to complete work projects.

It’s no wonder the Nordic concept of hygge (most often pronounced “hoo-gah”) has become a hot trend. A centuries-old concept, incorporating hygge in the home means creating simple and comfortable spaces that make you feel cozy and safe and appeal to your senses.1 The emphasis is on simplicity and fostering positive experiences, whether you’re spending time with family, reading a good book or catching up on work emails.

WARM AND RICH COLORS.

Whether you want to play with a bold color or stick with neutrals, one thing is clear—paint is the foundation of a great design. Painting your interiors has a return on investment of about 75 percent and is a relatively inexpensive project to complete, costing between $25 to $100 for paint alone.2 If you’re thinking of refreshing your home’s interiors with a coat of paint, popular colors include warm taupe, fresh green and dark tones. These colors are popular choices because they evoke feeling of warmth and coziness when you walk into a room.

Wondering how to pair these colors? Taupe is the perfect alternative to traditional neutrals, such as gray and white, and goes well with cool blues, earthy greens and deep shades of wine.  Green goes well with other earthy shades, such as copper and moss, as well as deep plum and bright pink. If you’re hesitant to paint your walls green, incorporate it into your home by way of accent pillows, rugs, lamps, vases and other accessories or add a few house plants.             

If you’re interested in adding more drama to a room, include bold, dark colors.  Dark shades add color and sophistication to any space. Plum and dark gray pair well with pale blues, warm whites and light gray.

Try one of these Colors of the Year:

            Poised Taupe – Sherwin Williams

            Greenery - Pantone

            Shadow – Benjamin Moore

RICH MATERIALS.

Lux materials create a space in which you can’t wait to kick off your shoes and relax at the end of the day. The Danes use a mixture of materials and pattern as a way of adding character and interest; however the overall look still needs to adhere to a color palette to prevent it from looking distracting.

Natural materials and textures allow you to maximize the comfort of the bedroom, living room or family room. Wood accents give rooms an earthy feel. Incorporate rustic wood sculptures, trays and furniture into your space. Choose furniture made with sustainably harvested wood certified by the Forest Stewardship Council (FSC) or use reclaimed wood for an environmentally friendly alternative.

If natural elements aren’t your style, but you want to add more visual interest to your room, try mixing patterns. Although it may have been avoided in the past, mixing stripes, florals and geometric prints actually help ground a space as long as the patterns feature complimentary colors or different shades of one color. If you’re worried about going overboard and making your room look “busy,” focus your mix in one area of the room. For example, add throw pillows in a variety of patterns to your sofa.

GOING GREEN.

According to a recent study from the American Psychological Association, people are more stressed than ever, with 24 percent of adults reporting they’re experiencing “extreme stress.”3

Top sources of stress include work and money. By incorporating small changes, like making your house more energy efficient, you can start to lower your bills and get back to relaxing and enjoying life like the Danish do (who consistently top the polls as the happiest people).

Save money on your energy bills by sealing the “envelope” of your home, which includes the windows and doors, walls, floor and roof. The better insulated your home is, the less heat will escape and the lower your energy bill (and stress level) will be.

The most heat loss occurs through the walls of the home: up to 35 percent of heat loss, to be exact.4 Ceramic insulating paint is a space-inspired coating of paint mixed with ceramic compounds and applied to interior or exterior surfaces. It seals your walls and prevents heat from escaping, which means reduced energy bills all year long.

THE FUNCTIONAL HOME OFFICE.

Twenty-four percent of employed people do some or all of their work at home.5 Since more people are working remotely than ever, home offices are becoming more popular. Even if you don’t plan on working from home, a home office gives you a place to pay bills, work on personal projects, plan your family’s schedule and more. Home offices tend to be multi-functional, serving as a guest room when family and friends visit, and have the potential to meet other needs that arise.

The key idea behind hygge is to enjoy the environment around you and for each room to be a sanctuary to sink into at any given moment. Your home office is no exception! Maximize your productivity, efficiency and focus by painting the walls shades of green or blue.6 If space is an issue, create a nook by installing docking and tech cabinets that are big enough to store a printer and other small office equipment and files without taking over the room.

If you don’t have room in your home for an office, look no further than your backyard. Shedquarters, small structures or sheds built in the backyard for use as an office or home-based business, are an attractive option for homeowners who don’t have a room to dedicate to an office and don’t wish to add on their homes. while the jury is out on how much value these structure add to a home, they can convert easily into a storage shed if you plan to sell in the future.    

SPLURGING ON KITCHEN RENOVATIONS.

The kitchen is often the busiest, most hectic room in the house and one of the top renovation projects with a high return on investment.7 We do more than cook meals there; it’s where homework is done, bills are paid, weeks are planned and more.

Kitchen remodels consistently show a respectable return on investment. According to the 2017 Cost vs Value Report from Remodeling magazine, a minor kitchen remodel touts an 80.2 percent return on investment.8 You don’t need to overhaul your entire kitchen to make it more hygge. Smaller additions can transform it into a relaxing and functional space you enjoy spending time with friends and family in.

What does a “minor kitchen renovation” entail? In addition to replacing the fronts of your cabinets and drawers, it also includes replacing out-of-date appliances and fixtures. You may also consider replacing countertops. Quartz and quartzite are becoming more common as are other green laminate options, including ones that mimic stone, wood and concrete. Laminates install in less time, often over the existing countertop, make it an ideal choice for busy homeowners as well. Other hot kitchen trends include incorporating sustainable materials like bamboo into your countertops and floors and water filtration systems.           

Want to improve the look and feel of your home’s interior? Are you thinking of upgrading to a home that better fits your changing needs? Call us—we’d love to help you achieve all of your home-related dreams.

 

Sources:  1. Time, Hygge, the Nordic Trend That Could Help You Survive 2016

            2. Quality Smith

                3. American Psychological Association, 2015 Stress in America

                4.  Department of Energy

                5. Department of Labor

                6. Entrepreneur, How the Color of Your Office Impacts Productivity

                7. Realtor.com

                8. Remodeling Magazine, 2017

Charles Dickens

by Cindy Wood Realty Group

Apple Pecan Pie

by Cindy Wood Realty Group

Apple Pecan Pie:

Filling:
2 pints fresh apples (can alter for blueberries, cherries, peaches, etc.)
3/4 cup sugar
1/4 cup flour
1/2 tsp ground cinnamon
1/3 cup water
1 tsp fresh lemon juice
1tsp vanilla extract

Bring ingredients to a boil in a saucepan over medium heat, stirring until sugar melts. Reduce heat to low and cook for about 10 minutes, stirring consistently. Set aside for later.

Pastry and Crust:
1 teaspoon sugar
3/4 cup butter, melted
1 cup sugar
1 cup flour
1 egg
1 pinch of salt 
1/2 cup pecans

Pour apple pie filling in a 9-inch deep dish pie plate with pastry (I prefer to roll out the pastry but you can use a frozen pie shell). Sprinkle 1 tsp sugar over filling. In a medium mixing bowl, mix butter, sugar, flour, egg, pecans, and salt together and pour over apple pie filling. Bake at 350 degrees for 45 minutes.

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Cindy Wood
Cindy Wood Realty Group
6040 S Fashion Blvd #201
Murray UT 84107
(801) 278-0999