Young Money

So you are in your 20’s or maybe even your 30’s and you want to become a Real Estate Tycoon before you hit your 40? Doesn’t sound like a bad plan. So why doesn’t everyone do it? 

Well, here are some things to think about:

• You’re broke - there aren’t too many young people who are not living pay check to pay check, being followed around by a looming student loan number over their heads.   
• You’re young - by definition of being “young and successful” you must first be “young”. This means that you don’t really know as much about life as you think you do, or even as you think you don’t. 
• You’re not good at staying focused - okay maybe not all young people, but most are distracted by social media, video games or really anything but making concrete plans to be strategically successful. 
• You’re not married - again, not all but the majority of young people are in and out of relationships, let’s be honest, this is not helping build a multi-million dollar real estate portfolio.
• You’re not creditworthy - we needed to keep the “you’re” thing going, but yeah… you have bad credit (it’s okay, it’s not a secret). 
• You’re probably alone in this - you might be motivated, but good luck getting your high-school best friends to partner up with you on this… time to do it on your own.
• You’re not getting any younger - time is ticking!

If the negatives were big enough to deter some readers at this point, it is probably better for them to leave now. This is not the type of endeavor for the faint of heart or the weak of spirit. But here is the part where we point out all of the pros to being young:

• You’re broke - this means you are probably highly motivated to not be broke! Motivation fades and hunger dies down, so lets use this to your advantage while it’s still here! Plus, if you end up making a big financial mistake, not a whole lot is on the line and you have time on your side for things to work themselves back out.
• You’re young - you may not know the wisdom acquired by a 65-year-old Vietnam vet, but you have time on your side! This is the most valuable and precious resource in the entire world. If you start now, the next 30 years can look pretty much how you want them to if you take this thing serious and come up with a plan, a real plan for your future goals. 
• You’re not good at staying focused - because you were brought up in the age of technology, this is a HUGE plus in today’s increasingly connected world! You know how to leverage resources, “wikihow” or “youtube” just about anything and if you can use technology to get knowledge instead of waste time, you will be way ahead of the curve.   
• You’re not married - so you don’t have superseding responsibly like a spouse or kids to always think of before you make a decision, enjoy this while it lasts my friend. You also have the ability to in the reno-zone if necessary. A live-in flip may actually not be a bad place to start since you are able to save on holding costs and you do have to live somewhere anyway! This also opens up the possibility of buying a small “multifamily”. Something like a duplex allows you to live and possibly not pay a mortgage from your own pockets, thus opening up possibilities for more investing with your cash.
• You’re not creditworthy - If you end up going with a live in fixer-upper or a rental property, you will definitely benefit form being able to take out a loan that requires owner occupancy. Your credit may not be perfect, but it shouldn’t bee to hard to get it where it needs to be with the fight guidance from a knowledgeable lender and less money down means more liquid cash.
• You’re probably alone in this - right, you might not have friends your age who are willing to walk by your side, but get some wisdom backing your plans. It isn’t hard to find people a generation or two ahead of you who are willing to get behind such a vibrant and ambitious spirit!  You want to know as much as you can about the mistakes others have made who have gone before you so that you don’t have to waste time and money repeating them. Get older people in your life and listen to what they have to tell you; it’s called getting mentored, and it is a brilliant idea for any young tycoon in-the-making.
• You’re not getting any younger - so use it to your advantage while you can! Spend crazy hours going after what you want, make mistakes, get your hands dirty, learn how to knock down dry wall and just go for it! Tycoons aren’t built in a day, but one can be built in a decade; use your 20’s wisely! 

 
And I wouldn’t be looking out for you if I didn’t share this major key: have a great agent to help you in the process. Contact a member of the Regal Homes Team and you know we are always happy to help.

Down Payment Assistance available for you, is it real or rumor?

Yes it is real and yes it is available. Now before you start asking questions, we are not guaranteeing that everyone is eligible for Down Payment Assistance (DPA), but what we are saying is that it is often more available than buyers think. Not only is it available, but “the average assistance can go anywhere from $5,000 to $20,000... In some high-cost areas, the down payment assistance can be as much as $100,000”.  You might be reading this and you have no idea what Down Payment Assistance even is… well, allow us to explain.

What is DPA? State, county, and city governments provide financial assistance for people in their communities. To be eligible, you normally must be qualified and actually buying a home (you can’t hold onto the money until you are ready in a few years). Also, “you don’t have to be a low-income household to qualify for many of these programs. In fact, in some areas of the country you can earn considerably more than your area’s median income and still be eligible for down payment assistance. Sometimes high-income earners can qualify for a grant of up to 5% of the purchase price of the home!” The good news is that there are more than 2,300 home ownership programs around the country. In addition to DPA there are first-mortgage products, closing cost assistance programs, and many others. “There are all kinds of down payment programs aimed at certain professions and demographics: firefighters, protectors, teachers, health care workers, service members, persons with disabilities, and even people who are buying energy efficient homes.” This is often times money that DOES NOT need to be paid back by the borrower; we like to consider it a gift from the DPA fairy.

Aside from DPA, when looking for financial assistance to buy a home there are programs offered by states and local, or city governments that can be just a helpful. Here are some prime examples:

• 
  Grants: There are all types of grants: home improvement grants, investor grants, mortgage grants and the list goes on and on. There isn’t a limit on the amount of grants you can apply for, and often times the only condition is that you live in the house for a certain amount of years to avoid paying back any of the money afforded.
• Second mortgage loans: These are the most popular form of financial assistance for down payments and they carry the worst reputation, mostly because people don’t really understand how they work. It is a second mortgage, but almost always with very little or even no interest over a period of time. 
• Tax credits: As a part of the American Recovery and Reinvestment Act (2009) or more commonly known as the “stimulus package,” buyers may have up to 8k as a tax allowance toward down payments, closing costs and other upfront purchasing costs if they are a first time home buyer and purchase a home before December 1^st. What makes it even better, is that buyers do not have to wait until tax season to use this allowance. Aside from being a first time home buyer, the main stipulation is that buyers must have a mortgage insured by the Federal Housing Administration.

Does the house I like qualify for DPA? The good news is that about 70 percent of listings are qualified for some type of home buyer assistance program. There is almost always a cap on the sales price of a home, which excludes million dollar condos (see our blog Condos on the Rise) and beachfront mansions. This also means that the program will depend on what specific neighborhoods or even tax allocation districts are eligible. Do I qualify for receiving DPA? We wont call it bad news, so the regular news is that buyers have to meet certain eligibility requirements. This is where we come in; we recommend reaching out to your Realtor because we know what is going on in the area you want to buy in, and chances are we are able to access information easier than you are. There is a lot of money out there and we want nothing more than to help you see if it has your name on it!

See more at:

• http://www.frameworkhomeownership.org/blog/for-you-too#sthash.RjK8UAZt.dpuf 
• http://www.allamericangrantguide.com/real-estate-grants.php
• http://www.bankrate.com/finance/mortgages/use-first-time-homebuyer-s-credit-upfront-1.aspx#ixzz40FlJuZZ
• DownPaymentResource.com

Use your tax return to get your foot in a new home!

Is your tax return an excuse to buy some new clothes and trendy gadgets, or could it be something more?

It’s tax season, or refund season or extra spending-money season… whichever you prefer. Before you blow your tax credit, stop and consider this: your refund could be just what you need to stop paying rent, up your personal equity and get yourself into a new home. Don’t believe me? I can see your hesitation, but let me break it down for you.

If the average American receives between 2k-3k back in taxes, we have a great starting place for most home-buyers. The usual down payment for a home-buyer is between 5% & 20% of the purchase price, with a conventional loan. However, if you qualify for a FHA (first time home buyer’s program) loan, the down payment can be as low as 3.5% of the purchase price!!  Let’s take a home that costs $100,000.00 to make math simple. With an FHA loan, that means $3,500.00 down; so the question is: 3.5k toward Apple, H&M and Delta, or 3.5k toward becoming a homeowner?  I think the answer is pretty easy!

"You might be thinking that being a homeowner is still not a viable option for you because of the long-term cost of owning a home. While owning a home is a great responsibility, it often time makes more sense financially to pay a mortgage than rent" says Stephen Perrigo, Senior Loan Originator at VanDyk Mortgage.   

Let’s use the same $100,000.00 home for the sake of easy calculations. If you obtain a loan at 3.5%, which is a standard rate today for a 30 year fixed loan (if you don’t know what this means, take a look back at my blog, When Should I Refinance My Home? ), your monthly payments will total $440.91 (for the Principle & Interest part of the payment). Is that less than what you are paying in rent right now? Not only is it more than likely less, it also isn’t just being put into someone else's pocket!

"While there are other monthly expenses with buying a home (Real Estate Taxes, Home Owner’s Insurance & Mortgage Insurance) the typical costs for these other expenses monthly doesn’t exceed $500.00, making your total payment on a $100,000 home LESS than $1,000.00 a month. This is STILL likely less than your paying for rent.  And when You’re an Owner? YOU earn the appreciation on the home, as your value increases (5-6% per year) yearly! NO MORE paying Someone Else’s mortgage…  Pay Your Own!!" Says Stephen.  


If you are thinking that this all sounds great, but you would need a house that is worth more than 100k to accommodate your lifestyle, the payment on a $200K Home INCLUDING the Taxes & Insurances typically doesn’t exceed $1,500.00 Mo.  That’s equal to most apartment rents, and MUCH less than the typical Home rental, for the same price home!!
What if your tax return isn’t enough for the down payment on a house?  There is still great news. You may qualify for down payment assistance, or be eligible for a CREDIT from Your Mortgage Lender, toward your Closing Costs!!  This is something I will explain in further depth in my next blog, so stay tuned!

Another option is to plan ahead. Maybe you are interested in making a larger down payment to avoid PMI (Private Mortgage Insurance­­­, usually higher with FHA loans), you can always create a separate savings account and put this year’s tax return in it to use toward a down payment in addition to your refund next year. Always smart to have a plan for the future!

In the meantime, if you have any questions please contact one of the Real Estate Professionals at Regal Homes and we will be happy to help. We have extensive experience working with home-buyers and will be able to help you create a specialized finance plan that makes sense for you. It always helps to have a great team behind you that can help you open the door to your dreams! 

Read More: 

• http://money.cnn.com/2015/01/13/pf/taxes/taxpayer-refunds/

• http://www.bankrate.com/finance/mortgages/7-crucial-facts-about-fha-loans-1.aspx

• http://lifehacker.com/5816641/use-separate-accounts-for-simple-bucket-budgeting 

This blog brought to you in part by VanDyk Mortgages