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4 Tips to Determine How Much Mortgae You Can Afford

by Roberta Kayne

4 Tips to Determine How Much Mortgage You Can Afford


By knowing how much mortgage you can handle, you can ensure that home ownership will fit in your budget.

Homeownership should make you feel safe and secure, and that includes financially. Be sure you can afford your home by calculating how much of a mortgage you can safely fit into your budget.

Instead of just taking out the biggest mortgage a lender qualifies you to borrow, consider how much you want to pay each month for housing based on your financial and personal goals.

Think ahead to major life events and consider how those might influence your budget. Do you want to return to school for an advanced degree? Will a new child add day care to your monthly expenses? Does a relative plan to eventually live with you and contribute to the mortgage?

Still not sure how much you can afford? You can use the same formulas that most lenders use, or try another of these traditional methods for estimating the amount of mortgage you can afford.

1. The general rule of mortgage affordability

As a rule of thumb, you can typically afford a home priced two to three times your gross income. If you earn $100,000, you can typically afford a home between $200,000 and $300,000.

To understand how that rule applies to your particular financial situation, prepare a family budget and list all the costs of homeownership, like property taxes, insurance, maintenance, utilities, and community association fees, if applicable, as well as costs specific to your family, such as day care costs.

2. Factor in your downpayment

How much money do you have for a downpayment? The higher your downpayment, the lower your monthly payments will be. If you put down at least 20% of the home's cost, you may not have to get private mortgage insurance, which costs hundreds each month. That leaves more money for your mortgage payment.

The lower your downpayment, the higher the loan amount you'll need to qualify for and the higher your monthly mortgage payment.

3. Consider your overall debt

Lenders generally follow the 28/41 rule. Your monthly mortgage payments covering your home loan principal, interest, taxes, and insurance shouldn't total more than 28% of your gross annual income. Your overall monthly payments for your mortgage plus all your other bills, like car loans, utilities, and credit cards, shouldn't exceed 41% of your gross annual income.

Here's how that works. If your gross annual income is $100,000, multiply by 28% and then divide by 12 months to arrive at a monthly mortgage payment of $2,333 or less. Next, check the total of all your monthly bills including your potential mortgage and make sure they don't top 41%, or $3,416 in our example.

4. Use your rent as a mortgage guide

The tax benefits of homeownership generally allow you to afford a mortgage payment-including taxes and insurance-of about one-third more than your current rent payment without changing your lifestyle. So you can multiply your current rent by 1.33 to arrive at a rough estimate of a mortgage payment.

Here's an example. If you currently pay $1,500 per month in rent, you should be able to comfortably afford a $2,000 monthly mortgage payment after factoring in the tax benefits of homeownership.

However, if you're struggling to keep up with your rent, consider what amount would be comfortable and use that for the calcuation instead.

Also consider whether or not you'll itemize your deductions. If you take the standard deduction, you can't also deduct mortgage interest payments. Talking to a tax adviser, or using a tax software program to do a "what if" tax return, can help you see your tax situation more clearly.

More from HouseLogic

More on the mortgage interest deduction (http://www.houselogic.com/articles/mortgage-interest-deduction-vital-housing-market/)

More on the tax advantages of homeownership (http://www.houselogic.com/articles/tax-tips-homeowners-preparing-2009-returns/)

 Other web resources

A worksheet on home affordability (http://www.ginniemae.gov/2_prequal/intro_questions.asp?Section=YPTH)

Freddie Mac information on home affordability (http://www.freddiemac.com/corporate/buyown/english/preparing/right_for_you/afford.html)

By G.M. Filisko.  G.M. Filisko is an attorney and award-winning writer who's owned her own home for more than 20 years. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

5 Tips for a Successful Home Remodel

by Roberta Kayne

As spring approaches, many homeowners grow eager to start remodeling projects to update and refresh their surroundings. Before getting started, it’s a good idea to hire a professional remodeler for a workable plan and better results, according to the National Association of Home Builders (NAHB).

“A professional remodeler knows how to translate a homeowner’s dreams and budget into a beautiful reality,” said Donna Shirey, CGR, CAPS, CGP, president of Shirey Contracting in Issaquah, Wash. and 2010 chairman of NAHB Remodelers. “They have the expertise and skills to satisfy a customer while keeping the budget in check.”

Here are five tips for planning a successful home remodel that you can enjoy for many years to come.

1. Compile a list of home remodeling ideas and draft a budget for the work.
You likely have some projects in mind, such as modernizing the bathroom, renovating the kitchen, replacing windows or repairing the roof. Prioritize your wish list: Maybe you don’t have the budget for your dream remodel, but professional remodelers can maximize your dollars by doing the work in phases, suggesting budget-friendly products and materials and implementing creative design solutions.

2. Look for a professional remodeler to help plan the project.
Start by searching NAHB’s Directory of Professional Remodelers at www.nahb.org/remodel. You’ll get a list of nearby remodelers to contact. Asking friends and neighbors for names of qualified remodelers will also help you find a match for your project.

3. Check the references and background of the remodeler.
After you start speaking with remodelers and find one or two who match your project’s needs, be sure to conduct some background research by checking with the Better Business Bureau, talking to their references and asking if they are a trade association member (such as NAHB Remodelers). Remodelers with these qualities tend to be more reliable, better educated and more likely to stay on top of construction and design trends.

4. Agree on a contract.
Talk over the details of the home remodeling project and begin reviewing the contract. You’ll want to check the remodelers’ insurance coverage, ask about any warranties on their work, know who is responsible for obtaining any building permits and understand the process for making any change orders after the contract is signed. Make sure that you and your remodeler see eye to eye before you sign on the dotted line.

5. Take advantage of the energy efficiency tax credits.
If your remodel includes replacing windows or doors, adding insulation, installing new roofing, upgrading heating or air-conditioning units, updating the water heater or installing energy generating products (such as solar panels, heat pumps or wind turbines) then you can take advantage of federal energy efficiency tax credits through 2010 that will help defray costs and maximize your remodeling budget while reducing home energy bills.

For more information, visit www.nahb.org.

Clean Homes Show Better--Five Areas To Scrub to Make Yours Sparkle

by Roberta Kayne
So, here's a question for you. Would you rather walk into a clean home or a dirty one? No, it's not a trick question but it is an important one. You see, when it comes to selling a home, many people forget how important the answer to that question really is. Sellers get busy looking for their new home, preparing the kids for a move, packing up their belongings, getting organized for their new life and relocation so much that sometimes their home that's for sale doesn't get the TLC that's needed to push it to the top of the buyers' must-have list.

http://realtytimes.com/rtpages/20100219_cleanhomes.htm

Long-Term Rates Rise to Over 5 Percent for the First Time in Three Weeks
Freddie Mac today released the results of its Primary Mortgage Market Survey (PMMS) in which the 30-year fixed-rate mortgage (FRM) averaged 5.05 percent with an average 0.7 point for the week ending February 25, 2010, up from last week when it averaged 4.93 percent. Last year at this time, the 30-year FRM averaged 5.07 percent.
Full Story: http://realtytimes.com/rtpages/20100226_rates.htm

HOMEBUYER SEMINARS SCHEDULED

by Roberta Kayne
If you know someone who is thinking about buying a home, please share with them that there has never been a better time to buy -- with housing prices low and interest rates low, it's an opportunity not to be missed.  And let them know that the "Fairy Godmother for First Time Buyers" is ready to help them. 
I have several Home Buyers Seminars scheduled for January, February, March and April --
 
January 27 - Dublin Library
February 24 - Hilliard Library
February 25 - Dublin Library
March 16 - Hilliard Library
March 23 - Dublin Library
 
Go to http://seminars.robertakayne.com to register . 
 

What You Will Learn At The Seminar

**  LEARN ABOUT THE NEW $8,000 TAX CREDIT FOR BUYING A HOME

**  LEARN ABOUT FORECLOSURES & SHORT SALES

**  LEARN ABOUT FINANCING A HOME….

  • How much can I afford?
  • What If I don’t have perfect credit?
  • What will my monthly payment be?
  • How do I get pre-approved?
  • How much do I have to invest?
  • How to save over $150,000 over 10 years!

 ** LEARN ABOUT FINDING A HOME…

  • Do I need a realtor?
  • What is available in my price range?
  • When should I start looking?
  • What if I’m in a lease?
  • How can I have a house built?
  • Should I have the home inspected?
  • What does an inspector do?

 Proudly sponsored as a community service

24 HOUR RECORDED INFORMATION
 
CALL TO RESERVE YOUR SEAT

1-800-282-9871 Ext. 3002

The Seven Steps to a Healthy Home

by Roberta Kayne

There are seven steps to a healthy home. A healthy home is:

  • Dry
  • Clean
  • Well Ventilated
  • Combustion Product Free
  • Pest Free
  • Toxic Chemical Free
  • Comfortable

How you live in your home affects each of the seven steps. Water, clutter and dust provide the conditions and ingredients for mold, insects, mice, rats, roaches and dust mites to make their home in your home. Pests inside your home can lead to allergic reactions; pests lead to the use of pesticides that are not good for people to breathe or ingest (eat). Food and water are an invitation for pests to live in your home. If you keep your home clean and dry you will have a home that is healthy and comfortable for you at the same time that it is not a friendly place for these unwelcome pests.

Ventilation removes stale air from your home and brings fresh air inside. This helps to remove some of the pollution that builds up inside your home. But you have to use the fans or ventilation system to keep your home from becoming stale and unhealthy. If ventilation is inadequate, moisture can build up increasing the humidity in your home. High humidity levels make the airfeel sticky and uncomfortable for most people. Mold and dust mites, however, love high humidity. So comfort, no pests and good indoor air quality go hand in hand.

Burning gas or oil produces combustion products such as carbon monoxide — these should never be present in a healthy home. Smoking is a form of combustion; so don’t let anyone smoke inside your home. Keep your home a healthy home.

What people bring into homes and store inside can often lead to problems. The containers that store toxic chemical cleaning compounds, solvents and oil-based paints slowly release the chemicals into the indoor air. Don’t bring these products into your home. When in doubt, get them out by disposing of them properly.

Living in Your Healthy Home

Getting Started

The first thing is to do is to learn about your home.  Familiarize yourself with the operation of all appliances and equipment.  Learn where the main water and gas shut off valves are.  Learn where the electrical panel is and which switch turns off the electrical power.  Learn how to turn off the water to the clothes washer and to the hot water tank in case a hose bursts or they begin to leak.

Probably the most important thing to learn about your home is how to report problems and to report them right away.  If a leaky pipe leaks a little bit for a long time major problems can occur.


Dry  Too much water in your home is bad.  Too much water results in mold, insects, rodents and mites. Remember that a healthy home is a dry home.

One of the worst things you can do is use a humidifier.  Humidifiers add uncontrolled amounts ofwater to indoor air.  They also have to be cleaned each week.

If you must use a humidifier – don’t – use a vaporizer.

If you must use a vaporizer, if we can’t convince you not to use one, keep the interior relative humidity below 30 percent in the winter.  To monitor humidity you need a measuring device called a hygrometer. Clean the vaporizer regularly if you use it.

If you have bathroom fans use them when you are in the bathroom, especially when showering. They remove water from bathrooms.

If you have a kitchen fan use the fan when you are cooking.  Especially when you are cooking with water.   Boiling water is a humidifier.  And you already know how we feel about humidifiers.

If you have a clothes dryer, make sure it is vented to the outside.  If you vent it inside it is a humidifier…and you already know how we feel…

Plumbing leaks need to be fixed – right away.  Find out how to shut off your water if you have a leak.  Report the leak and insist that it get fixed. Be a pest.  It’s important.

Leaking clothes washers and leaking hot water tanks can be a major headache and need to be fixed right away.

Basements are often damp.  Don’t store anything in a damp basement. Mold will probably grow on what you store in a damp basement. If your basement is damp run a dehumidifier.

Don’t open your basement windows in the summertime, the basement will only get wetter. Outside air in the summertime is humid and the moisture in it will condense on cold basement walls the same way water condenses on the outside of a cold glass.

If you have a dry basement and you want to store stuff in it – don’t.  But if you must, use wire or plastic racks or shelving that elevates things above basement floor slabs and allows lots of air circulation.  Don’t let any paper or cardboard touch the floor or a wall.  Better still, don’t store any paper products or fabrics in your basement. Use sealable plastic containers.

While we are talking about storage, don’t store things in attics either.  This advice only applies to attics without floors. It’s important that attics are well ventilated and storing things in attics interferes with air flow and also probably causes problems with attic insulation.  The only thing that should be in your attic is air – and insulation.

If you have gutters or downspouts, keep them clean.  Don’t disconnect gutters and downspouts. Keeping water away from the walls helps keep your basement dry. 

And finally don’t install wallpaper in your home. Why? Wallpaper keeps walls from drying if they get wet – especially vinyl wallpaper. Trapped moisture allows mold to grow.


Clean 
Dust is bad; it contains asthma triggers. Over two thirds of dust in homes originates outdoors, and is tracked in on feet.  House dust is known to contain many hazardous materials.  Stop the dust at the door.  Take off you shoes and provide a space for your shoes at the door.  Provide a welcome mat and keep it clean.  Vacuum and filter the rest away.  And make the home easy to clean.  Don’t clutter your home.

A good trick is to have a pair of inside shoes and a pair of outside shoes.

Use a vacuum regularly.  If you can afford one, get a vacuum with high efficiency filtration and an embedded dirt detector (it indicates when the floor is clean). Check the bag regularly. Replace the bag when necessary.

When you use cleaners use mild cleaners and soaps.  Don’t turn the area under your sink into a toxic chemical dump by storing powerful chemical cleaners. Don’t store pesticides there.

Change your furnace filter regularly – or insist that it be changed.  Filters should be rated at MERV 6-8 (35 percent or better dust spot efficiency).

Don’t use or purchase an ozone air cleaner.  Ozone is a respiratory irritant and can trigger asthma attacks.  And while we are at it, don’t use air fresheners or room air deodorants.  They are indoor air pollutants that mask problems and deaden the senses if they are not causing respiratory problems on their own.


Well Ventilated 
Dilution is the solution to indoor pollution that cannot otherwise be prevented or removed.

Almost everything in your home gives off chemicals or moisture.  If there are too many pollutants in the air that you breathe you have a problem.  Since people love their possessions and we can’t get rid of their possessions or find possessions that don’t give off pollutants we have to ventilate the pollutants in the indoor air out.

Oh by the way, people also give off stuff – moisture, odors, carbon dioxide….we’ll stop the list here because it can get pretty ugly.  So even in a house without stuff, the people in the house need ventilation air to dilute the “bio-effluent” they themselves generate.  People also cook – well some of them do – and generate more stuff.  You get the picture.

Use your bathroom fans, when you are in the bathroom and after showering.

Use your kitchen fan when cooking.

Open your windows when it is not too cold (or when it is not too hot or humid if you have air conditioning).

When you are cleaning, especially with powerful cleaning agents (the stuff we told you not to store under your sink), open your windows and turn on an exhaust fan.

If you can, ventilate your dry cleaning before you hang it in your closet.  Air it out outside if you can.  Or on a porch, or in your garage. Or in a room with an open window.  Better still buy clothes that don’t need to be dry cleaned.  Some “dry clean only” clothes can be washed – but be careful.

Combustion Free
  When something is burned it produces products of combustion, particularly carbon monoxide and particles that are unhealthy.  Products of combustion should never be found in the indoor air of a healthy home.

Don’t smoke in a healthy home.

Don’t burn candles in a healthy home – at least not the scented ones.  The aromatic candles generate soot and other bad stuff (chemicals that are not good to breathe).

When you cook use the kitchen fan.

Don’t ever use a gas oven or the stove top to heat your home.

Don’t purchase or use ventless kerosene or gas space heaters.

If you have a garage don’t operate your car in the garage (except to get it in or out).  Certainly don’t warm it up in the garage.  And never run your car in the garage with the door to the house open.


Pest Free  Infestations of cockroaches, mice and rats can all cause allergic reactions.  Even after the pests are gone, their skin, hair and feces can remain and cause allergies.

Making a home pest resistant produces a healthier home two ways:  it reduces exposure to allergens and asthma triggers released by the pests and it can reduce the amount of pesticides used.

Keep them out. Keep bushes and trees at least 3 feet from homes.  Bushes and trees near a home provide food, a living place and sheltered passage for pests such as rats, mice, birds, roaches and ants.  Don’t store trash and clutter near buildings.

Block pest entries.  Seal utility openings and joints between materials.  Use corrosion-proof materials such as copper or stainless steel mesh.  Rodents can chew through many materials.

Reduce food and water availability.  Keep kitchen waste in covered containers.  Don’t leave food out.  Clean your dishes.  Don’t pour grease down drains.

Don’t use moth balls. They release chemicals that are not good for people. If a pesticide is necessary get a professional who specializes in integrated pest management to apply it.  Don’t use wall injected pesticides – except boric acid.

In the Northeast, dust mites do not generally colonize buildings because buildings are too dry for much of the year. They colonize bedding, stuffed animals and favorite chairs because we humidify these things with our bodies. Control is by washing these items in hot water (greater than 130° Fahrenheit), which kills the mites and washes away allergens.


Toxic Chemical Free  Toxic cleaning compounds, pesticides, oil- or alkyd-based paints and solvents can contaminate the air. Many of the containers these products are stored in slowly release the chemicals into the indoor air. These products should not be stored inside the house. When in doubt, get them out and dispose of them properly.

Finally, don’t do unusual things indoors like welding or stripping paint from furniture.

Comfortable  If you are uncomfortably dry in the winter and you decide to use a humidifier, do not over humidify your home.  Limit interior relative humidities to less than 30 percent in the winter. To measure the relative humidity you need a measuring device called a hygrometer.

In the winter keep you blinds open to capture solar gain.

In the summer keep your blinds drawn to reject solar gain.  This is particularly important for west facing windows.

If you have removable storm windows, remember to install them for the winter.

If you have air conditioning do not over-cool your home.  Temperatures below 75 degrees Fahrenheit can cause problems with summer sweating within walls (where you can’t see it) and the condensation can promote mold growth.

10 Tips for First Time Buyers

by Roberta Kayne
  1. Do your homework before you start looking. Decide specifically what features you want in a home and which are most important to you.
  2. Get your finances in order. Review your credit report and be sure you have enough money to cover your down payment and your closing costs.
  3. Don’t wait to get a loan. Talk to a lender and get pre-qualified for a mortgage before you start looking.
  4. Don’t ask too many people for opinions. It will drive you crazy. Select one or two people to turn to if you feel you need a second opinion.
  5. Decide when you could move. When is your lease up? Are you allowed to sublet? How tight is the rental market in your area?
  6. Think long-term. Are you looking for a starter house with the idea of moving up in a few years or do you hope to stay in this home longer? This decision may dictate what type of home you’ll buy as well as the type of mortgage terms that suit you best.
  7. Don’t let yourself be “house poor”. If you max yourself out to buy the biggest home you can afford, you’ll have no money left for maintenance or decoration or to save money for other financial goals.
  8. Don’t be naïve. Insist on a home inspection and, if possible, get a warranty from the seller to cover defects within one year.
  9. Be picky, but don’t be unrealistic. There is no perfect home.
  10. Get help. Consider hiring a REALTORÒ as a buyer’s representative. Unlike a listing agent, whose first duty is to the seller, a buyer’s representative is working only for you. And buyer’s reps are paid out of the seller’s commission payment.

If you have questions about the home buying process, I am here to help.  I have helped over 120 families in the last six years with their real estate transactions. I offer knowledgeable advice, friendly and professional service, and a caring attitude. There is no cost or obligation for answering your questions, and there is never any sales pressure. 

Home Is Where the Heart Is during Holiday Season

by Roberta Kayne

 

Christmas_Tree  For many Americans, a home is still where the heart is during the holiday season. According to a recent survey conducted by Weichert, Realtors, a new house was the most popular item on consumers’ holiday wish list and the home was the place they most wanted to spend their time during the holidays.

The study found that 51% would choose a new house if they could have just one holiday wish granted this year, while 21% would wish for a new car. Surprisingly, despite today’s challenging job market, only 14% had a new job at the top of their list.

When asked where they would most enjoy spending the holidays, it was clear Americans still equate the holidays with home. A majority of respondents, 55%, said they would most enjoy spending the holidays in their own home, 27% opted for time at a relatives and 3% preferred to visit with close friends. Still, the holiday is seen as a time to get away and vacation for 14% of Americans. However, only 1% of respondents felt they would most enjoy spending the holidays at a restaurant.

“The home often serves as the backdrop for many warm holiday memories,” said James M. Weichert, president and founder of Weichert, Realtors, one of the nation’s largest independently owned real estate companies. “From a mantle to hang the stockings to a roof to display the lights to a dinning table to gather around, a home offers many ways to celebrate the holidays and share special moments with family and friends.”

The survey also revealed that the joy of giving remains the best gift of all during the holiday season. Nearly nine out of 10 respondents said giving a gift that makes someone’s day is more satisfying than getting a gift that lets you know someone cares.

Should I Buy a Home Now?

by Roberta Kayne

I'm often asked if this is a good time to buy a home. Some clients are concerned that home prices may fall further than they have already. They are assuming that the best course of action is to wait for the bottom in the market and then buy. The problem with this approach is that you don't know where the bottom is until you see it in the rear view mirror, meaning until you've missed it!

Home prices are one factor in determining your cost of ownership, but so are interest rates and financing availability. Even though interest rates have gone up in the last six months, they are still near historic lows. Since your monthly mortgage payment is a combination of paying down your principal and paying the interest owed, if home prices come down a little further but interest rates go up, it could cost you even more to service a mortgage on an identical home!

While a home is a major investment, it is also the center of your personal life. It's important to live in a home that reflects your taste and values, yet is within your financial "comfort zone." To that end, it may be more important to lock in today's relatively low interest rates and low home prices, rather than to hope for a further break in prices in the future.

Please give me a call if I can be of any assistance in determining how much home you can afford in today's market.

Displaying blog entries 11-19 of 19

Contact Information

Roberta Kayne
RE/MAX Affiliates
7239 Sawmill Rd., Suite 210
Dublin OH 43016
Phone: 614-652-2843
Fax: 614-474-8051