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Home Safe Home

Tuesday, August 29, 2017
by Audrey and Frank Serio, CRS

Home Safe Home

Home is a place you should feel safe and secure. Sometimes, we take it for granted and unfortunately, we do need to remain vigilant about things we do that could compromise our safety. Here are a few tips to consider:

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  • Everyone loves an inviting home including burglars. Make sure it looks occupied and is difficult to break in.
    • Always lock outside doors and windows even if you’re only gone for a brief time.
    • Lock gates and fences.
    • Leave lights on when you leave; consider timers to automatically control the lights.
    • Keep your garage door closed even when you’re home; don’t tempt thieves with what you have in your garage.
    • Suspend your mail and newspaper delivery when you’re out of town or get a neighbor to pick it up for you.
  • Posting that you’re out of town or away from home on social networks is like advertising your home is unprotected.
  • Equally dangerous could be allowing certain social network sites to track your location.
  • Don’t leave keys under doormats, in flowerpots or the plastic rocks; thieves know about those hiding places and even more than you can think.
  • Trim the shrubs from around your home; don’t give criminals a place to hide.
  • Use exterior motion detectors and yard lighting.
  • Have an alarm system and use it when you leave home and go to bed.
  • Put 3 ½” deck screws in door plates and door hinges.
  • Have good deadbolts on all exterior doors.
  • Exterior doors should be solid core.
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Assumptions are an Alternative

Tuesday, August 22, 2017
by Audrey and Frank Serio, CRS

Assumptions are an Alternative

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In the late 80’s, both FHA and VA began requiring buyers to qualify to assume their mortgages. The main reason there haven’t been many assumptions in the past 25 years is that interest rates have been steadily going down and if a person has to qualify, they might as well do it on a new loan and get a lower interest rate.

Based on projections by Fannie Mae, Freddie Mac, the MBA and NAR, rates for the second half of 2017 and 2018 are expected to be higher. When interest rates on new mortgages are higher than the rates of assumable FHA and VA mortgages in the recent past, it becomes more advantageous to assume the existing mortgages.

FHA and VA loans originated with lower than current interest rates have great advantages for buyers and sellers.

  1. Interest rate won't change for the qualified buyer
  2. Lower interest rate means lower payments
  3. Lower closing costs than originating a new mortgage
  4. Easier to qualify for an assumption than a new loan
  5. Lower interest rate loans amortize faster than higher ones
  6. Equity grows faster because loan is further along the amortization schedule
  7. Assumable mortgage could make the home more marketable

An Assumption Comparison can help determine the savings and financial benefits of an assumable mortgage with a lower rate. 

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Would-be Buyers with Student Debt

Tuesday, August 15, 2017
by Audrey and Frank Serio, CRS

Would-be Buyers with Student Debt

59% of non-owners are not comfortable taking on a mortgage with their student debt according to the Aspiring Home Buyers 2017 survey. It is estimated that the college graduates have an average of $37,172 in student debt.

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Fannie Mae, who has loan programs with as little as three to five percent down payments, has announced changes to how student loan debt is treated that could make the difference in qualifying for a mortgage.

For the 5 million borrowers who participate in the reduced payment plans, actual payments are considered for calculating debt-to-income ratio rather than maximum payment amount.

Non-mortgage debts paid by another party for at least 12 months won’t be included in calculating debt-to-income ratio.  For example, payments being made on a student loan by the parents would not be counted against the DTI ratio for the student.

These changes can make it possible for would-be buyers with student debt to get a home now instead of waiting for years. Being pre-approved by a trusted mortgage professional is the best way to confirm that these changes apply to your situation. Call today for a recommendation of a trusted mortgage professional.

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Family & Friends Mortgage

Thursday, August 10, 2017
by Audrey and Frank Serio, CRS

Family & Friends Mortgage

Anytime a lender and borrower can agree on rates and terms, it can be a good match but IRS has specific rules that govern the transaction especially when the parties are family or friends.

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The loan must be done in a business-like manner with a written note specifying the loan amount, interest rate, term and collateral. IRS requires that the mortgage be a recorded lien to allow the interest deduction.

Sometimes, a friends and family situation might have a less than normal interest rate on the mortgage. However, the rate charged in the note is regulated by the minimum applicable federal rate which is published monthly by IRS based on current Treasury securities. For July 2017, the rate is 2.57% for terms over nine years.

The seller must report the interest paid to them along with the name, address and Social Security number on schedule B when the buyer uses the property as their principal residence.  A mortgage between family and friends can be good for both parties. It may allow the borrower a slightly lower rate without the expenses of a traditional lender while giving the note holder a higher rate than they can earn in available investments.

Your tax professional can guide the transaction whether you’re a buyer or a seller and your real estate professional can help arrange to have the documents drawn and filed.

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Down Payment Problem - Are You Sure?

Thursday, August 3, 2017
by Audrey and Frank Serio, CRS

Down Payment Problem - Are You Sure?

There is increasing difficulty for first-time home buyers to save for their down payment as indicated in the graph.  Several factors that contribute to this trend include rising rents, rising home prices, student loan debt and flat wages.

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Some would-be buyers feel they cannot buy a home today but a large part of those decisions may be based on inaccurate assumptions.

Nine out of ten non-owners believe they need ten percent or more for a down payment. The typical down payment for first-time buyers is six percent. VA has 100% loan programs as well as USDA for certain qualifying areas and buyers. FHA is known for 3.5% down payments. And FNMA and Freddie Mac have down payments as low as 3% and 5%.

There are gift provisions available for buyers who have an “angel” who would like to help them with their down payment.

There are ways to borrow against a person’s qualified retirement program for a down payment. It isn’t necessarily limited to the buyer but could include a relative. Interestingly, a son or daughter can borrow against their retirement to benefit their parents.

In some respects, having good credit and sufficient income is more important than the down payment. Don’t rely on “common knowledge.” Get expert advice and counsel to see if there is a way to advance your dream of owning a home. 

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Photo of Audrey and Frank Serio, CRS Real Estate
Audrey and Frank Serio, CRS
The Serio Team of Monument Sotheby's Realty Coastal Division
26 N. Pennsylvania Ave
Bethany Beach DE 19930
Direct: 302.236.4277
Office: 302-539.1033
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