Who WOULDN’T want a shorter mortgage? Here’s how…

No one wants to spend longer making mortgage payments than they have to. The obvious way to pay off a mortgage faster is to get a shorter-term loan, like a 15-year instead of a 30-year. But on a $300,000 home purchase with 10 percent down, you’ll pay about $620 more per month on a 15-year loan than on a 30-year loan (including mortgage insurance), which might be too expensive for you.

So how do you fix your budget with a loan you can afford, yet still pay it off early if you have extra money? Here’s a look at four common approaches.

Refinance, then reinvest savings

It’s always prudent to evaluate refinancing when rates drop, but unless you refinance from a 30-year loan to a 15-year loan, refinancing doesn’t automatically shave years off your mortgage.

If you bought a home for $300,000 with 10 percent down five years ago, the rate on your 30-year fixed loan of $270,000 was about 4.875 percent, giving you a payment of $1,429 (plus mortgage insurance). With today’s refinance rates of about 3.625 percent on your remaining $247,494 balance, your new payment would be $1,129, saving you $300 per month.

It’s a huge savings, but you’re resetting your payoff clock from 25 years back to 30 years. However, if you take the extra step of applying the $300 savings toward your new loan each month, you’ll shave 9.5 years off your new mortgage, giving you a shorter term for the same budget.

Make biweekly payments

A biweekly payment plan is the simplest way to shorten your mortgage without a material budget increase. This plan shaves about four years off your mortgage by paying half your payment every other week.

Doing so means you’re making 26 biweekly payments per year, which is the equivalent of 13 monthly mortgage payments per year instead of 12. Your budget can usually absorb this because you’re simply chopping your mortgage payment in half and paying each half every other week.

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Are you Mr. Roper-ready?

6 Things to Know Before You Become a Landlord

Real estate agent at work
Monkey Business Images/Getty

As the housing market continues to recover, you may hear about renting mavens who capitalize on the increasing rental market. Renting can be a great way to make some extra income, but it’s important to consider the appropriate preparations before you get on board. If you are thinking about renting out your home, here are some tips to consider.

1. Know the Laws

Not every state operates with the same landlord and tenant laws so be sure you know the laws that will govern your property before listing it. Your neighborhood may also have rules about rentals. Not only is your responsibility a huge obligation, but there are legal implications involved in becoming a landlord. It’s a good idea to study up on your rights and what you can or cannot demand from your tenant, including when you can legally enter the home. (Also keep in mind that federal housing law prohibits discrimination based on race, color, national origin, religion, sex, disability and family status — such as whether children will live in the home.)

2. Create a Contract

A simple lease drawn up with the accurate legal jargon can go a long way toward protecting you. It’s a good idea to have every adult who will be living in the home sign the document before moving into the rental. The lease should include details about the length of the rental term, security deposit, due dates for rent, maintenance responsibilities, rules of behavior and eviction terms. This can save you thousands in court fees in case something goes wrong. It’s also a good idea to make sure you have the numbers of emergency contacts for your tenant.

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Low down payments AND loan security – a great combo…

Low down-payment mortgage options return

Except these home loans are safer

money zipper

New programs are starting to allow first-time homeowners back into the housing market, except this time, new regulation will help prevent the same type of lending that spurred the financial crisis. Per CNNMoney:

“It’s one of the things that’s inhibiting first-time homebuyers,” said Rob Chrane, president of Down Payment Resource. “There are a lot more people who can qualify for a home that don’t realize that they can.”

Two big factors that are playing in to the recent ease is the Federal Housing Finance Agency’s new down payment programs and the Federal Housing Administration’s reduction in mortgage insurance premiums.

In October, Fannie Mae and Freddie Mac announced 97% loan-to-value offerings.

At the beginning of the year, the Obama Administration directed, via executive action, the FHA to reduce annual mortgage insurance premiums by 50 basis points, from 1.35% to 0.85%.

FHA monthly insurance premiums dropped dramatically at the beginning of 2015. The change, from 1.35% to only 0.85%, will make FHA loans a better choice for some borrowers after years of prohibitively high premiums, said Anthony Hsieh, chief executive officer of loanDepot, one of the largest FHA lenders in the country.

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Consensus says rates are going up this year – have you refinanced yet?

1 in 3 FHA borrowers would benefit from refinancing

FHA premium cut could benefit 2.4 million homeowners

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One in three Federal Housing Administration borrowers would benefit from refinancing.

That’s the conclusion of a study conducted by the Housing Finance Policy Center at the Urban Institute.

The Center’s Laurie Goodman, Karan Kaul and Jun Zhu took a closer look at the impact of the premium cut on FHA refinance volumes and have concluded that roughly 2.4 million current FHA borrowers could benefit from refinancing.

They started with 6.6 million existing FHA loans and excluded the following three categories of loans:

  • 1.1 million loans originated prior to June 2009: Borrowers with FHA mortgages that were originated prior to June 1, 2009 are eligible for FHA’s Streamlined Refinance program. This program allows grandfathering of the pre-June 2009 annual MIP of 0.55%, and also reduces the upfront MIP to just 0.01% for these borrowers. Because these rates are significantly lower than FHA’s current premiums, pre-June 2009 FHA borrowers are essentially unaffected by the latest premium cut and are therefore excluded from our analysis.
  • 0.8 million delinquent and modified loans: We also excluded 0.5 million borrowers who we estimated to be delinquent, and an additional 0.3 million with modified mortgages.
  • 0.3 million loans with a term of 15 years of less: FHA’s latest premium cut does not apply to mortgages with a term of 15 years or less. These mortgages are also excluded from our analysis.

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Looks like it’s definitely time to buy!

Like a lot of people, Mark Stevenson has had it with rent prices.

His Walnut Creek, CA apartment complex raised the rent last year, and he recently learned that his 1-bedroom unit is headed up another $351, to $1,830 a month.

“Here’s my dilemma: Renew a 12-month rental lease complete with a 24 percent mugging, or buy a condo,” Stevenson said. “I’m looking to buy now.”

That could be a good financial bet, given the findings from Zillow’s latest Home Price Expectations Survey. A panel of more than 100 experts predicted:

  • U.S. home values will rise 4.4 percent in 2015, to a median value of $187,040.
  • Median U.S. home values will exceed their pre-recession peak of $196,400 by May 2017.
  • 51 percent expect rental affordability will not improve for at least two years.

Already, renting is half as affordable as buying, something Danville, CA broker Kevin Kieffer of Keller Williams Realty hears about all the time.

“‘My landlord is getting ready to hike the rent by $200, and I’ve got to buy:’ Since 2001, I haven’t heard that more consistently than I am now,” Kieffer said.

The issue is basic economics: Demand is outstripping supply.

“Vacancy rates on rental units in the fourth quarter were down to 7 percent, the lowest in more than 20 years,” said David W. Berson, chief economist for Nationwide Insurance.

The squeeze could continue for years, said Berson, who participated in the survey.

Rents will rise as millennials strike out on their own — but not all of them will rent. “If a larger share start to move toward [buying], the rent increase will not be quite as rapid,” he said.

The situation is worse in some places than in others.

In Dallas, for example, a renter making the median household income spends 27.7 percent of it on rent. In Chicago, it’s 31.5 percent; in New York, 40.5 percent and in Los Angeles, 47.9 percent.

More than half of the survey panelists who had an opinion said the market will correct the nation’s soaring rents, requiring no government intervention.

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FHA loans may be easier to get in 2015…

FHA attempts to change rules to spur lending

Looks to loosen mortgage lending

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The Federal Housing Administration is attempting to limit one of the most powerful tools federal attorneys have to punish banks for making mistakes in mortgage lending, an article in The Wall Street Journal said.

Because banks must certify that FHA-backed mortgages they originate have no errors, when mistakes are found the Justice Department has sometimes pursued damages under a Civil War-era law known as the False Claims Act that lets the government recover triple damages.

The article explained that banks started to pull back from originating mortgages since they feel penalties are too harsh relative to the errors made.

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Attention, all you architecture lovers…

Architectural Roadtripper to Spend a Year Hopping Between 30 Le Corbusier Homes

89702598075243.jpgAll photos via Fondation Le Corbusier

Step one: Come up with an art project that involves crashing in architectural landmarks for an extended period of time.
Step two: apply for fellowships and funding at all the relevant foundations you can think of.
Step three: wait for responses, and follow up multiple times (most foundations won’t be super keen on letting artists run amok in the masterworks they are duty-bound to safeguard.)
Sounds like a great plan, but sorry, it probably isn’t going to work because the Italian artist Cristian Chironi already had this genius idea, and now he’s spending the entire year in 30 different Le Corbusier buildings in 12 countries for his project “My House is a Le Corbusier.”

Tip for aspiring funding applicants: this is the sort of language that works. “‘My House is a Le Corbusier’ is intended to evolve over the long term and culminate in the totality of all the experiences that Chironi will undergo while actually living for variable periods of time in the many homes designed by Le Corbusier around the world,” the artist’s website notes. Translation: he will be inviting others into his pedigreed crash pads to “discuss and see the artist at work, partake in events, consult the assembled material or simply drink a coffee.”

The first stop on Chironi’s whirlwind Le Corbusier tour, which was just featured in Architectural Digest, was the Esprit Nouveau Pavilion in Bologna, where he spent three weeks in January working and interacting with visitors. The Esprit Nouveau Pavillion was originally built in Paris in 1925, but was reproduced in Italy in 1977, and became a cultural center a few years ago. Three weeks is more than enough time to have a big party, and indeed, the last night of Chironi’s stay there saw a live music performance inspired by the building’s architectural plans. His next stop is a studio apartment inside the glass-and-concrete Immeuble Molitor building in Paris.

According to the artist’s website, “Chironi turns these houses into ‘privileged vantage points’ to better understand how the legacy of Le Corbusier is perceived today.” He views the whole project as a year-long performance; we view it as the world’s most ingenious idea for living in architectural landmarks.

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