Pre-Approval vs. Pre-Qualification

Looking to purchase a home in Orange County? Have you looked into getting pre-approved or pre-qualified yet? Here are some important things to keep in mind when choosing between the two since securing mortgage pre-qualification and pre-approval are important steps to the home buying process.

Pre-Approval is NOT the same as a Pre-Qualification

Many often get confused between the difference of a pre-approval and a pre-qualification and assume that they are the same, but this is where they may get ideas mixed up. A pre-approval is a statement from a lender that you qualify for a specific mortgage amount based on a review of all of your financial information meanwhile a pre-qualification is where a lender runs your credit and discusses your goals with you.

What Do You Need For Getting a Pre-Approval?

Pre-approval means the lender is confident you have the ability to make the necessary down payment as well as an income that can sufficiently cover mortgage payments, so in order to get a pre-approval, you will need:

  • Income Information. Be prepared to have your pay stubs, tax returns, W-2’s, and other documents that show any sources of income from the past two years.
  • Asset Information. If this applies to you, prepare to have bank account statements or any other forms of documentation that show other ways you have been given money.
  • Personal Information. Remember to bring a form of identification using a driver’s license or a passport and also be prepared to provide your social security number for a credit check.

What Do You Need For Getting a Pre-Qualification?

Getting pre-qualified is an informal process where you are interviewed by a mortgage professional about your assets, income and expenses. Since this process is just to give you an idea of the price range you can afford, not much personal information is needed from you.

So which is the better option: Pre-Approval or Pre-Qualification?

This choice is up to you. Since your end goal is to give sellers the confidence to accept your offer on their home, it is your call on which process would show that the reliability and simplicity of your offer stand outs over other offers.

But many sellers often like seeing the individuals who show interest in their homes to be pre-approved since a pre-qualification really doesn’t bring you any closer to securing a mortgage. In the case that the home you are eyeing is in a very hot market, sellers may not even want to bother looking at your offer until you are pre-approved since a pre-approval may better show that you are serious in the competitive market.

Personal financing can be something difficult to execute, but it is possible. With a little planning and some thoughtful decision making, you can finally purchase your dream home. If you have any questions or need any help in regards to financing, contact the Kovacs Connection Team today!


Courtesy of Cuselleration

How to Take Control of Your Finances

Living in Orange County and need help saving money? Here are some tips to help you take control of your finances and as well as unexpected money leaks.

Create A Budget

Taking control of your finances all begins with creating a monthly budget for yourself by taking a good look at your monthly income versus your monthly expenses. A budget should be created by looking at past spending habits and coming up with a reasonable max dollar amount to allow yourself to spend for categories such as food, groceries, clothing, and more. A helpful way to track your progress for staying within your budget is to record all your spendings and categorize them in a spreadsheet. This may seem tedious at first, but this will be a great help in the long run. Seeing how close you are or how far you are from the max amount you allow yourself to spend will help you be more careful with each transaction based on whether it is something you need or something you want. Having a budget can also be a useful tool for saving money and for helping you only spend a reasonable amount rather than overspending your account balance.

Prioritize Necessary Recurring Payments

Prioritizing the categories in your budget will help you keep in mind of which categories are more crucial to include in your budget over others, such as clothing and miscellaneous items. You might have payments that are recurring on a month-to-month basis, such as utilities, credit card bills, and so on. On top of creating a monthly budget for yourself, prioritize important categories such as those recurring monthly payments in order to be sure that those are paid off first.

Consider Food Expenses

Food is one of largest categories that drains your money over others. This drainage isn’t just from buying groceries or eating out too much, but it also includes the food you buy that goes to waste. Although buying food in bulk may seem cheaper short-term, it can easily be forgotten and end up going to waste to cost more long-term. The best way to minimize your spending towards food is to meal plan and purchases groceries on a weekly basis in order to resist the urge to buy in bulk or eat out.

Implement Energy-Saving Efforts

Energy costs can skyrocket if you don’t pay attention to them and can result in a significant money leak. This may include keeping your lights, heat, or air conditioning on when you are away or when they do not need to be on. Here are some simple ways to reduce your energy costs by using the resources you already have or implementing cheaper alternatives:

  • On a sunny day, open shades or blinds to let the natural light in instead of turning on your lights.
  • On hot days, open all your windows to let air in instead of turning on the air conditioning. You can even buy portable fans that can help you cool off without it being too costly.
  • On cold days, try to layer up to keep warm instead of turning on the heater. Using thermal curtains or draft stoppers can also help keep warm air in to keep your home cozy.

Some energy costs that are out of your control can include outdated appliances or old light bulbs because they can be using up more energy than they need. Look into investing in more energy efficient appliances and bulbs because they can be expensive short-term, but worth it long-term.

Cancel Unnecessary Subscriptions and Memberships

Subscription services are easy to sign up for and can easily be forgotten because a small monthly charge may not be as noticeable. Many of these subscription services are even prone to becoming less useful long-term, so take a moment to reconsider whether it is necessary to keep some of your subscriptions and memberships or whether you should say goodbye to the ones you no longer use. A helpful way to make this decision is to look at the financial benefits a subscription or membership would have for you to help you keep your expenses within your monthly budget.

Personal financing can be something difficult to execute, but it is possible. This can prevent you from being in debt, help you get out of debt, improve your credit score and ultimately allow you to take control of where your money is going. With a little planning and some thoughtful decision making, your bank account will become much healthier.

If you have any questions or need any help in regards to financing, contact the Kovacs Connection Team today!


Courtesy of Cuselleration

4 Tips for Getting Out of Debt

The process of getting out of debt may seem hard or tricky. It may even seem impossible when it comes to dealing with credit cards, student loans, car loans, and other debts. Although getting out of debt is not something that can be dealt with overnight, it is something that can be dealt with over time; all it takes is a goal to reach, a plan to execute, and help from a loan officer. Here are some tips that you can look at to ease the process of getting out of debt!

1. Find out how much debt you have and write it all out onto a list.

The first step is to have a set goal to work towards. Your total payoff number is a real, complete goal to work towards.

You can do this by:

  • Gathering your most recent statements for all loans and credit cards
  • Getting your annual credit reports to check them for accuracy and to identify all debts
  • Getting your credit score to find out whether you’re eligible to lower your interest rates or for a debt consolidation loan
  • Checking the National Student Data System to gather all student loan information

2. Plan your strategy.

Once you have gathered all the numbers to calculate the total amount of debt you have, you will need to set a plan to reach towards decreasing that total number.

Here are some things to keep in mind when formulating your plan:

  • What are you going to pay off first? Your plan should include a set area for where your money is going to be allocated on a monthly basis. That may include targeting the debt with the highest interest rate or the debt with the lowest balance.
  • How are you going to pay off your debt? Debt can only be paid off with some sort of cash flow either from working or from selling unwanted items.
  • Do you need any help? Because the process of getting out of debt is tricky, you may need some advice. Being in debt is not an uncommon thing, so your loan officer will know exactly how to make a plan that will help you successfully get out of debt as soon as possible.

3. Adjust your spending habits.

Getting out of debt does not just include minimizing your spendings overall, but it includes adjusting your current spending habits to differentiate your needs from your wants. The best way to get out of debt quicker is to avoid using your credit card and live frugally.

Using your credit card is equivalent to using money that you don’t have, which will end up increasing how much debt you have rather than helping you get out of debt. So the first thing to do before you adjust any spending is to not use your credit cards at all.

Adjusting your spending habits and living frugally may look like this:

  • Cook and pack your own meals. Once you do this, there is no need to eat out or buy your meals. It is as simple as cooking your own breakfast, lunch, and dinner and packing them accordingly to be on-the-go. As a bonus, this is also a healthier option than eating out.
  • Budget your grocery trips and make a grocery list. This will help you set aside a budget for the ingredients you will need to cook your own meals. Having a budget will allow you to pick and choose what you would really need when making your grocery list. Having both a budget and a grocery list will refrain you from making impulsive purchases.
  • Learn to say “no” towards unnecessary spending. This includes putting a pause on expensive hobbies and activities or cutting your monthly subscriptions to Netflix or Spotify. When money is tight, it will take some sacrifice to help you get back on your feet.

4. Monitor your plan.

Once your plan is set, you will need to track your behavior closely to make sure you’re making progress and making the necessary adjustments towards areas in your plan that isn’t effective in helping you reach your goal.

When you monitor your plan, track whether your credit score is improving while keeping in mind that getting rid of debt this is not an overnight process. If you see that your credit score is improving, think about getting a consolidation loan or balance transfers to save the money that’s often spent on interest charges for your remaining debts. If your plan is effective as is and you see that the amount of debt you owe is decreasing, stick with your plan until your debt is paid off.

Don’t let past mistakes keep you from getting out of your debt. Getting out of debt takes time, but it’ll be completely worth it. Since the process is not a quick fix, the best thing to do to get out of debt is to manage it responsibly over time. If you need any assistance, contact the Kovacs Connection Team today!


Courtesy of Cuselleration

Tips to Help You Qualify for a Home Mortgage

Getting a mortgage may seem like one of the hardest decisions and one of the most stressful components in the homebuying process. There are many options to choose from that need careful thought, some research, and help from a local loan officer. Here are some tips that you can look at to ease the process of getting a mortgage.

1. Get a mortgage pre-approval instead of a mortgage pre-qualification.

Getting pre-approved for a mortgage is an in-depth process that involves running a credit check on yourself and verifying your income and assets. This in-depth process will look at how much you can afford as well as the interest rate that you would pay on the loan. If you are serious about buying a home, you will need to get pre-approved since many sellers will only accept offers from buyers that have a pre-approval done. Even if sellers don’t require you to be pre-approved, it will make your offer stand out from the rest!

Starting the pre-approval process may seem hard, but it is fairly simple. To get started your loan officer will let you know what personal and financial information you need to submit to them. Once you supply the appropriate documents they will review everything and provide you with your pre-approval letter as well as information on the funds from the mortgage. These funds are usually available shortly after a seller accepts your offer on the home.

2. Save your cash and avoid moving your money around.

If you have a low balance in your bank account when you walk in to speak to a local loan officer, your home loan application can easily be rejected. In order to get pre-approved, you have to show that you have enough cash to be able to afford a down payment on the home you’re putting an offer on. When saving your cash, avoid shifting large amounts of money in and out of your accounts during the homebuying process, especially when you are trying to get approved for a mortgage. Keep in mind that underwriters will be checking and keeping track of your finances while you are in the homebuying process.

3. Avoid changing jobs shortly before closing the deal.

When getting pre-approved for your mortgage, it is beneficial to show that you have at least two years of consistent income history. Any changes to your employment or income status can stop or greatly delay the mortgage process. Loan officers need to be able to evaluate your finances throughout the process to see if you are still qualifying for the loan. Job changes can also raise red flags for underwriters who want to make sure you are still able to qualify for the loan.

Underwriters hold a big role in whether you are qualified to get a home mortgage, so take careful steps to avoid raising red flags for them when they look through your finances, credit scores, and more. The best thing to do when you are unsure if you qualify is to speak to your loan officer and ask them for their expert opinion as well as any additional advice they have that can help you qualify for a home mortgage. Each of these steps are crucial to help you get pre-approved and secure the loan you need for your dream home so make sure to go over everything in detail with your loan officer! If you need any help, contact the Kovacs Connection Team today!


Courtesy of Cuselleration

4 Key Tips to Getting a Mortgage

Maybe you’re thinking this is the right time to buy a home. Mortgage rates are low, and you drove by that ‘perfect’ house, and you’ve got the itch to buy. So what do you need to know to go from “I’ve got to have it,” to “Sold!” The best mortgage tip advice is to do your homework before you start house shopping. Here are a few tips to consider:

Mortgage Tips: Face the Facts

You’ve heard about the fiasco known as the Equifax credit breach. More than a third of us had our personal information compromised. As a result, financial gurus have recommended that you check out your credit score with Equifax, TransUnion and Experian to make sure it is accurate. It’s critically important when applying for a home mortgage, because a low credit score and credit fraud can derail your plans for your dream home. Most lenders require a minimum credit score of 680 in order for you to qualify for a home loan. If you are looking at an FHA loan, they look for credit scores north of 620. In addition to your credit score, bankers will look at your payment history. Have you missed payments on other obligations? Are you frequently late on paying your bills? Those markers will let a mortgage lender know of your responsibility, and likelihood of paying your home mortgage on time.

2) Are You Cashed Up?

Money talks, especially when it comes to a home loan. If your credit score is sketchy, and your payment history isn’t so hot, then cold hard cash talks. Even if you have a great credit score, walking into a lender’s office with no cash on hand for the purchase can deny you a mortgage. So how much cash do you need? Every mortgage lender has it’s own criteria, but in general, you’ll need a down payment of at least 3.5% of the home price. More is better. With the price of homes in Southern California, we know that means saving a lot of dough, but the real savings comes when you don’t need PMI. PMI stands for Private Mortgage Insurance, and lenders waive PMI when you put 20% down on your home. So break out your calculator and figure out how to put the money away. Not having PMI lowers your monthly mortgage payment, so saving now pays off on down the road. Also remember additional costs: closing costs, home appraisals, title searches, moving expenses. We want you to have the home of your dreams, but also want you to be educated before you buy.

3) Debt Free is a Beautiful Thing

When you apply for a mortgage, lenders take a long peek into your financial history. Not only are they interested in if you pay off your obligations on time, but also how much debt you are carrying. They call it Debt to Income Ratio, which just means the more debt you are carrying, the less likely you are to be approved for a loan. Every lender has their own evaluations, but a good rule of thumb is that they will see if your debts (credit cards, student loans, potential mortgage payments, etc..) exceeds one third of your income, they are queasy about loaning you the cash. If you pay off your debts before filling out a home mortgage application, you’re much more likely to see “Approved” on your application. Also note that lenders will check your debt status just before closing, so any other big purchases you make right before closing can impact their decision.

4) Know Your Limits

We know you are anxious to find and move into that perfect home. Contact us to let us show you what is available. We suggest getting pre-approved for a mortgage before our first house hunting trip. It’s simple: just contact a lender, give them your financial info and let them tell you the amount they will lend. It will free you up to only look at properties that make sense for you. You don’t want to fall madly in love with a property that there is no way you can afford. Speaking of which, lenders can pre-approve you for a lot more house than you can actually afford. Life can get much more stressful when you are house-poor, so get pre-approved, and use it as a general guideline when you are looking at listings, but always consider how much extra cash you will have after paying the mortgage every month, in order for your purchase to be a happy one!

Benefits of a Veteran Home Loan

VA home loans are one of the most powerful loan options on the market for veterans and active military. It’s becoming difficult for many military borrowers to build the credit and assets necessary to move forward with conventional home financing.

 

The advantages of the VA loan program over other loan types are a big reason why VA loan volume has continually increased over the last five years.

VA financing comes with significant financial benefits for those who have served our country. The requirements to secure them are often looser than what would be needed for a conventional or even FHA loan.

For a lot of active military and veterans, the VA home loan program is their only real path to homeownership. The increasing popularity has stemmed from the main advantages of VA loans. Let’s take a deeper look at the great benefits of VA mortgages:

No Down Payment

The VA loan program offers service members and veterans incredible benefits, from zero dollars down to no PMI and more.

Qualified veterans can get a VA loan without making any down payment. Compared to FHA and conventional loans, this gets converted into significant monthly savings.

The minimum down payment amount on an FHA loan is three and a half percent. In conventional financing, it’s oftentimes five percent. On a quarter million dollar mortgage, a military borrower would need to come up with eighty-seven hundred dollars in cash for an FHA loan and twelve thousand five hundred dollars for the conventional loan. These are significant and insurmountable sums for the average military borrower. The average VA borrower has just under nine thousand dollars in total assets.

The great benefit of being able to buy a home with a zero dollar down payment helps veterans and active military members get a slice of the “American dream” without having to spend years scraping and saving for a sizable down payment. This means those who serve our country can get into homes in the present, not in the future years down the road.

No Mortgage Insurance

Unlike FHA and conventional loans, a VA loan does not require monthly mortgage insurance. FHA loans come with both annual and upfront mortgage insurance charges. On a quarter million dollar mortgage, the FHA annual mortgage insurance can add about one hundred seventy dollars per month to your monthly mortgage payment.

According to VA estimates, veterans who secured a VA loan last year will save more than forty billion dollars in private mortgage insurance costs over the life of their loans.

Conventional borrowers who cannot put down twenty percent usually have to pay for private mortgage insurance.

This is an additional monthly fee that is tacked on to your monthly mortgage payment until you build twenty percent equity. The cost would vary by the loan amount, but it is not uncommon to pay more than one hundred dollars per month for PMI.

Competitive Interest Rates

Since the VA guarantees a portion for every VA loan, financial institutions could offer lower interest rates to VA borrowers that are typically one half to one percent lower than conventional interest rates. Rates are based on the inherit risk considered by the lender to finance the loan. The VA’s guarantee brings lenders a sense of security that allows them to charge competitively lower rates.

On a thirty-year quarter million dollar loan, the difference between paying a four percent and four and a half percent rate can mean approximately forty thousand dollars in savings over the life of the loan.

Closing Cost Limits

Closing costs and fees are included in all mortgages. But the VA actually limits how much veterans could be charged when it comes to these expenses. Some fees and costs need to be covered by other parties involved in the transaction. These safeguards assist in making homeownership affordable for homebuyers that are qualified.

Do you have a question on a VA loan for a home in Rancho Santa Margarita, Coto De Caza and other Orange County surrounding cities? We recommend you talk to the Ryan Grant Team, OC’s top mortgage lender!

Mortgage Do’s and Don’ts

If you are looking forward to venturing into mortgage investments in Orange County, it is important for you to have a clear understanding about what you should do and should not do. This will assist you in avoiding frustration when you are dealing with your investments.

First time home buyers should learn more about the loan process to be adequately prepared for buying their first home.

Here is a list of DO’s and DON’Ts to keep in mind when you are dealing with mortgage investments in OC.

DO

Take a look at your credit report
Initially, you should take a look at your credit report. If you have a high credit score, you have the opportunity to go for a better mortgage. If you can pay it in a timely manner, you will be able to improve your credit score in the future as well. If you want to get a better understanding of your credit score, you should take a look at your FICO score. It is offered to you for free by financial institutions at the end of the month. You are also provided with the ability to purchase FICO from one of the reputed credit rating agencies. If your credit score is not good, you don’t need to worry because there are effective tips that you can follow to improve it within a short period of time. It includes paying your bills and debt on time and reducing the number of debt you owe. Click here to get your free credit report.

Reduce the debt to income ratio
Your debt to income ratio tells how you are capable of managing your monthly payments. As a result, the mortgage lenders take a look at it before lending the requested amount. To create a positive impression on an Orange County mortgage lender, you will have to reduce the debt to income ratio. It would be better if you can reduce the ratio down to 36%. If you have a stronger ratio, you will be provided with the opportunity to go for a better mortgage rate. Increasing your monthly gross income and reducing your monthly recurring debt can be considered as two of the best options available.

DON’T

Spend too much on your mortgage
After you obtain the mortgage, you shouldn’t spend most of your money on it. If you do, you will end up with financial difficulties in the long run. Based on your income, most companies push you to take the largest loan you are approved for,  which is why you want to find the right mortgage provider. Ryan Grant is a great Orange County mortgage company who provides a more educated loan process and look at all your finances to help you determine the best mortgage for your overall financial situation. This doesn’t mean you need to go ahead and obtain that maximum recommended amount. If you do, you will have to spend most of your monthly income on the mortgage payment. As a result, you will have to compromise on many other things in your life. Just take a look at how many years are left for you to pay the mortgage installments. You will realize how much frustration you will have to go through and the sacrifices you will have to make when you have pay too much on your mortgage.

Expect refinancing to reduce the interest rate
There is a possibility for you to save money. You just have to focus on shortening the term of your loan. In other words, you will be able to save money if you go for a 10 year fixed rate by giving up your 20 year mortgage.

On the other hand, cash out financing can also assist you with some major savings. With this approach, it would be possible for you to let your home equity settle down the other debts. This way, your monthly installment would increase because you shorten the duration of the mortgage. Also, you would be able to reduce the rate of interest, which can help you save money in the long run.

All in all, we conclude that the mortgage rates are always changing. If you’re interested in learning more contact Orange County’s top lender, Ryan Grant.

Ryan Grant’s team of mortgage experts focus on giving their clients a more educated, more motivated and more confident home buying experience so we trust you will be in good hands!

We take great pride in ensuring all clients have a phenomenal experience buying a home. Visit us at cotoconnection.com and a member of our team will contact you shortly. We look forward to speaking with you soon!

5 Tips on How to Avoid a Foreclosure in Mission Viejo

Facing a foreclosure in Mission Viejo? Not to worry, just because things look bleak now, that doesn’t mean that you don’t have any options. In fact, there are a few important things that you can do to put an end to talks of a foreclosure for good.

1. Renegotiate with Your Lender

Here’s the low down fact that you may not have thought of, a foreclosure is a lot of work! No lender wants to go through mountains of paperwork and process after process if they can easily avoid it. So, your task is just that, avoid it.

Negotiating with your lenders saves them a great deal of time that they can be spending on something that will ultimately bring the company more revenue. They want to renegotiate with you because it means that they can refocus on the bigger fish. This is the easiest way to avoid a foreclosure because the lenders are actually hoping for the quickest way out of the situation, just like you.

2. Sell Quick

Selling your home is another way to avoid a foreclosure in Missions Viejo, and the best part is that if you find a good deal, you might just make some money too. This is another one of those situations where a considerable amount of time is saved on the lender’s side because they would be trying to find a buyer after foreclosing on you anyway.

A good point to remember after the lender files the NOD (Notice of Default), any legitimate offers you get from a potential buyer must be considered by them. This sale can potentially save you and them a lot of time and money. Be aggressive, if they are foreclosing you need to try to sell your home as if your life depends on it!

3. Deed in Lieu

This option is when you sign the house back over to the bank. Great, right?! Not exactly. It will still affect your credit just like a foreclosure would. This is assuming, of course, that you can get one.

Lenders don’t often grant a deed in lieu because many homeowners will turn around and sue stating that the terms were unclear and therefore didn’t know what they were signing. Also, the second or third mortgage you took out on your house would need to be paid by the lender.

Even if you can document your financial hardship, you’ve had your home on the market for a good stretch of time with no luck, and there are no liens on the house, it’s still fairly rare to see a deed in lieu granted.

4. Have Your Buyer Step Up


There are two other ways that you can save your home from a foreclosure in Mission Viejo that involves your buyer. The first is an assumption and the second is a lease-option. Both are good options but might be tricky to navigate.

An assumption will basically have your buyer pay off the end of your loan. To do this, you’ll need the lender to delete the portion of your loan that requires you to pay off the loan at the time of sale. It may sound complicated, but this is actually a much-preferred option for lenders, buyers, and sellers alike to avoid a foreclosure.

A lease-option is when your buyer, in a manner of speaking, becomes your “tenant” until they can pay an adequate down payment. This agreement is usually for those that don’t have the upfront money, have poor credit and are trying to raise it or are in the process of selling their old house in order to get the funds necessary to purchase your new home.

In any event, you’ll be using their money to aid in paying your mortgage until they can properly take over ownership. A word of caution, though, be sure that you have enough money coming in with total to pay your mortgage and for wherever you will be living while these proceedings are going on.

5. Bankruptcy

Your last ditch effort should always be bankruptcy, especially because all it really does in the case of a foreclosure Is to freeze it until a later date. The way that this will work for you is this gives you time to recover financially by the time the negotiations start for your debt repayment on the home. Don’t go it alone; you should get a bankruptcy lawyer to help you get the best deal possible!

Need More Help?

If you need more hands on tips on avoiding a foreclosure in Mission Viejo, call us at 949-350-0146 or email us at Debrakovacs@cox.net and we’ll help you sell your home today!

5 REASONS REALTORS BUY INSTEAD OF RENT

It may seem like a no-brainer that most realtors own a home instead of renting an apartment, but after the economic dip in 2006, this wasn’t always the case. Due to everyone buying their homes at the maximum market price only to have these prices plummet, many people including realtors decided to rent instead of own.

This is no longer the case! Now that the housing market is extremely healthy, it is the perfect time to find homes for sale and we have some key reasons why to buy instead of rent.

1. Never Dealing with a Landlord Again

There are plenty of great landlords and property managers out there, but they aren’t all perfect. When your dishwasher breaks and you’re a tenant, you have to call the landlord who will then schedule your repair. This can take days or even weeks.

When you own your home, you don’t have to call your realtors for permission, you’re in charge! You can choose the service provider, when you want it repaired, and how you want the repair done. Landlords won’t allow you this freedom because repairs are often done with their contracted company on a schedule that usually involves them coming into your living space while you aren’t home. No one wants that, and when you own a home you won’t have to deal with this ever again.

2. No Inflation

One of the most common reasons potential buyers tell realtors they are looking for their own property is an increase in rent. Landlords need to cover their own assets, often this means the tenants foot the bill. When you buy a home and get a mortgage, your price is locked in.

Meaning that if you get a 25-year mortgage, your monthly payment will be the same today and on your final payment 25 years from now. This is an excellent tool because the cost of living is going up and rental prices will go up with it. You could be paying double in rent 10 years from now, but if you have a mortgage on your own home, you won’t have to worry about that.

3. Have It Your Way

When it comes to our living space, no one wants to be told what to do. When you rent, you can’t change the layout of your apartment without first getting approval. Owning your home saves you from this trapped feeling. If you want to paint your daughter’s room pink, knock a wall down to extend your living room, or convert the garage into a guest room, owning your home is the only way to get exactly what you want.

Realtors know first-hand that not every home is perfect, but they easily can be with simple modifications. My background in interior design and years of real estate experience has allowed me to see the potential of every home and find the perfect fit for any buyer, even when it needs a few changes to become their dream house.

4. Tax Deductions

One of the most underappreciated reasons to own a home is tax deductions. This is mainly because most people don’t know how many home-related deductions there truly are. Just ask your realtors and they will tell you that the list is substantial.

Some examples are your mortgage, which is tax deductible. Energy efficiency improvements such as solar paneling, energy efficient boilers, and many similar devices can also be tax deductible. And be sure to ask your realtors if you qualify for any federal deductions on selling your previous home because you just might save a huge sum of money.

5. Equity!

The low down on equity is that it is fantastic. Ask your realtors for more detailed information about how equity works, but here are the basics.

Let’s say you have owned your house for 2 years and you get it appraised and the value of your home has now increased. You have gained free equity along with the amount that you have already paid off. So, if you’ve paid $25,000 off of your home which you purchased at $250,000, but that same house is now worth $400,000, you now have an equity of $175,000. This is how it would look: (new value) $400,000 – (old value) $250,000 = $150,000 + (paid off) $25,000 = (total) $175,000 in equity!

It may sound confusing but you can use a home equity loan or line of credit from this equity gain to improve your home, pay down debt, or a number of other new financial opportunities.

The Kovacs Connection is thrilled to become your realtors and help you find the best quality homes for sale in your area. Being in the top 1% of realtors worldwide takes dedication, not only to real estate but to making sure that you are happy with your purchase and your experience.

If you have any questions about buying or selling a home, please call us at 949-350-0146 or contact us and we will gladly discuss your options.


Photo Credit: Shutterstock/Alexander-Raths

DEALING WITH FINANCING

As the events of the last few years in the real estate industry show, people forget about the tremendous financial responsibility of purchasing a home at their peril. Here are a few tips for dealing with the dollar signs so that you can take down that “for sale” sign on your new home.

Get pre-approved. Sub-primes may be history, but you’ll probably still be shown homes you can’t actually afford. By getting pre-approved as a buyer, you can save yourself the grief of looking at houses you can’t afford. You can also put yourself in a better position to make a serious offer when you do find the right house. Unlike pre-qualification, which is based on a cursory review of your finances, pre-approval from a lender is based on your actual income, debt and credit history. By doing a thorough analysis of your actual spending power, you’ll be less likely to get in over your head.

Choose your mortgage carefully. Used to be the emphasis when it came to mortgages was on paying them off as soon as possible. Today, the debt the average person will accumulate due to credit cards, student loans, etc. means it’s better to opt for the 30-year mortgage instead of the 15-year. This way, you have a lower monthly payment, with the option of paying an additional principal when money is good. Additionally, when picking a mortgage, you usually have the option of paying additional points (a portion of the interest that you pay at closing) in exchange for a lower interest rate. If you plan to stay in the house for a long time—and given the current real estate market, you should—taking the points will save you money.

Do your homework before bidding. Before you make an offer on a home, do some research on the sales trends of similar homes in the neighborhood with sites like Zillow. Consider especially sales of similar homes in the last three months. For instance, if homes have recently sold for 5 percent less than the asking price, your opening bid should probably be about 8 to 10 percent lower than what the seller is asking.