You CAN Afford a Home
80/10/10 Mortgages
To reduce the risk of losing money, lenders select well-qualified buyers with a strong credit history, low income-to-debt ratio, and income stability.
Loan programs that help lenders reduce their risk are 80/10/10 or 80/15/5 loans. These combine a first mortgage and a second mortgage to spread the risk between two lenders. The numbers represent the first loan percentage, second loan percentage, and the down payment.
Here's how it works. The first lender offers a mortgage for 80% of the value. Another lender offers a second mortgage for 10% of the value. The borrower puts down 10%. With 80/15/5, the second lender offers 15% and the buyer puts down 5%.
With only 80% of the loan invested, 80/10/10 and 80/15/5 loans reduce the first lender's risk. The buyer makes a payment to the first lender and a second payment to the second lender.
Since neither lender lends more than 80% of the value, private mortgage insurance (PMI) is not required. PMI is only necessary when a lender lends more than 80% of the value. No private mortgage insurance means a lower monthly payment.
Thursday, February 12, 2004
Which Home Improvements Pay Off
Study Pegs "Value-Added" Contributions Of Key Home Real Estate Features by Kenneth R. Harney Realty Times
In what could be the largest study of its kind, researchers have calculated the "value added" contributions of dozens of home features and facilities. The study used sophisticated statistical analysis techniques on nearly 29,000 home sale transactions over an eight-year period.
Would you believe:
An extra half-bath adds 15 percent to the selling price of a home, but an extra full bathroom adds a stunning 24 percent.
Adding a sitting area to the master bedroom increases the sales value of the house by eight percent.
Garages more than pay for themselves -- adding 12.9 percent to the selling price of the home.
Fireplaces are hot. A house with a single fireplace sells for 12 percent more than an identical house without one.
A basement-located laundry room actually cuts the selling value of a home, whereas a laundry room located on the first or second floor raises the market value by 15 percent.
These are just a handful of the sometimes provocative conclusions reached by the new statistical study by the National Center for Real Estate Research, an affiliate of the NAR. The study, "The Value of Housing Characteristics," was conducted by Florida State University professors G. Stacy Sirmans and David A. Macpherson using data on closed home sale transactions in a 21-county metropolitan area including portions of Maryland, Delaware, Pennsylvania and New Jersey between 1996 and 2003.
What sets the new study apart from most "value added" research is that it uses sophisticated statistical analysis techniques -- a hedonic regression model -- to isolate each feature or characteristic of a house and calculate its specific contribution to selling price.
Most other "value-added" studies, by contrast, are based on estimates by home improvement contractors, architects, builders and others directly involved in real estate transactions. Some studies, such as one conducted annually by a national remodeling publication and used by contractors to pitch home improvement projects to potential customers, have been criticized on methodological grounds.
The new National Center for Real Estate Research study covered a wide range of house types, locations, price brackets and other characteristics. Here are more of the conclusions:
Additional bedrooms enhance value, but not as much as you might think -- just 4.1 percent to selling price per extra bedroom.
Higher ceilings are good -- a house with 9-foot ceilings sells for 6.2 percent more than an identical house with lower ceilings.
Central air conditioning is a big value-adder -- 12.4 percent to the selling price. In other words, a house without central A/C would sell for 12.4 percent less than an identical house with A/C.
In-law suites may be popular with in-laws, but most home buyers apparently don't value them. In fact, according to the study, an in-law suite knocks 5.2 percent off selling price. Ditto for a professional office in the house (minus five percent).
Vinyl and aluminum on the exterior of a house lowers value (minus 3.5 percent and minus 3.6 percent respectively), whereas stucco (+9.7 percent) and wood (+8.5 percent) are value enhancers.
Powering-up your electrical service pays off a lot. A heavy-duty 400 amp service adds an impressive 28 percent to selling price, and 200-300 amp service adds 14.2 percent.
Family rooms are good (+7.3 percent), as are separate dining rooms (+6.2 percent), but buyers will only pay 1.1 percent more for a "utility/mud room," according to the study.
An island in the kitchen is a smart investment (+5.3 percent to selling price), but a double oven in the kitchen adds even more (8.8 percent).
Water and golf views are predictably strong value enhancers. A "water view" adds 7.8 percent to sales price, but an actual "waterfront" location adds nearly 18 percent. A "golf view" adjacent to a golf course adds 8.1 percent.
In what could be the largest study of its kind, researchers have calculated the "value added" contributions of dozens of home features and facilities. The study used sophisticated statistical analysis techniques on nearly 29,000 home sale transactions over an eight-year period.
Would you believe:
An extra half-bath adds 15 percent to the selling price of a home, but an extra full bathroom adds a stunning 24 percent.
Adding a sitting area to the master bedroom increases the sales value of the house by eight percent.
Garages more than pay for themselves -- adding 12.9 percent to the selling price of the home.
Fireplaces are hot. A house with a single fireplace sells for 12 percent more than an identical house without one.
A basement-located laundry room actually cuts the selling value of a home, whereas a laundry room located on the first or second floor raises the market value by 15 percent.
These are just a handful of the sometimes provocative conclusions reached by the new statistical study by the National Center for Real Estate Research, an affiliate of the NAR. The study, "The Value of Housing Characteristics," was conducted by Florida State University professors G. Stacy Sirmans and David A. Macpherson using data on closed home sale transactions in a 21-county metropolitan area including portions of Maryland, Delaware, Pennsylvania and New Jersey between 1996 and 2003.
What sets the new study apart from most "value added" research is that it uses sophisticated statistical analysis techniques -- a hedonic regression model -- to isolate each feature or characteristic of a house and calculate its specific contribution to selling price.
Most other "value-added" studies, by contrast, are based on estimates by home improvement contractors, architects, builders and others directly involved in real estate transactions. Some studies, such as one conducted annually by a national remodeling publication and used by contractors to pitch home improvement projects to potential customers, have been criticized on methodological grounds.
The new National Center for Real Estate Research study covered a wide range of house types, locations, price brackets and other characteristics. Here are more of the conclusions:
Additional bedrooms enhance value, but not as much as you might think -- just 4.1 percent to selling price per extra bedroom.
Higher ceilings are good -- a house with 9-foot ceilings sells for 6.2 percent more than an identical house with lower ceilings.
Central air conditioning is a big value-adder -- 12.4 percent to the selling price. In other words, a house without central A/C would sell for 12.4 percent less than an identical house with A/C.
In-law suites may be popular with in-laws, but most home buyers apparently don't value them. In fact, according to the study, an in-law suite knocks 5.2 percent off selling price. Ditto for a professional office in the house (minus five percent).
Vinyl and aluminum on the exterior of a house lowers value (minus 3.5 percent and minus 3.6 percent respectively), whereas stucco (+9.7 percent) and wood (+8.5 percent) are value enhancers.
Powering-up your electrical service pays off a lot. A heavy-duty 400 amp service adds an impressive 28 percent to selling price, and 200-300 amp service adds 14.2 percent.
Family rooms are good (+7.3 percent), as are separate dining rooms (+6.2 percent), but buyers will only pay 1.1 percent more for a "utility/mud room," according to the study.
An island in the kitchen is a smart investment (+5.3 percent to selling price), but a double oven in the kitchen adds even more (8.8 percent).
Water and golf views are predictably strong value enhancers. A "water view" adds 7.8 percent to sales price, but an actual "waterfront" location adds nearly 18 percent. A "golf view" adjacent to a golf course adds 8.1 percent.
Tuesday, February 10, 2004
Difficulty in Making Decisions
Sometimes we have difficulty in making decisions. We choose one course
of action and then wonder if we should have chosen another. We
vacillate between decisions that face us - should I do this or this?
Should I go here or there? Should I pick this or that? Should I
be with this person or that person? Should I go forward or backward?
We drive ourselves crazy trying to make the right decision. We choose
one decision only to turn around and desperately choose the opposite.
Let us look at what we are trying to accomplish with our decisions.
For most of us making a decision comes from a place of avoidance.
We attempt to make a decision where we can avoid certain feelings.
We try to find a decision that is comfortable for us. So, we
vacillate back and forth between decisions in an attempt to avoid
uncomfortable feelings. "Give me a decision that is comfortable!"
Truly, most decisions are not comfortable for we are called upon to
make decisions that take us beyond our limitations, beyond what has
blocked and contained us. We are called upon to make decisions that
take us out of our old patterns and beliefs. This is not always
comfortable. If we expect to find a comfortable decision, we will
avoid making a decision.
To release our difficulty with making decisions, are we willing to be
present with whatever feelings that arise from that decision? It is
all about being present with whatever we decide - uncomfortable
feelings and all. Avoiding these feelings is usually why we put off
decisions - we are afraid of the feelings that the decision brings.
The second thing we try to avoid is making the "wrong" decision.
We are often afraid to make any decision just in case it is the
"wrong" one. If we enter the arena of "right and wrong", making
decisions will be very frustrating and confining indeed.
The solution is simply this: "Am I willing to be present with whatever
I decide and invite the very best to occur? Am I willing to see that
whatever decision I give to my Higher Power can be used for
healing?
Prayer:
God, would You help me to be present with whatever I decide.
Would You help me to feel whatever feelings are connected with
this decision so I may be present for what is best.
Would You help me to see that, ultimately, my real decision is
to be with You, to be guided by Your Wisdom, Your Peace,
Your Direction.
Please help me see that when I am present with You, decisions
unfold in the best way possible.
For your consideration,
-- The Guides
Sometimes we have difficulty in making decisions. We choose one course
of action and then wonder if we should have chosen another. We
vacillate between decisions that face us - should I do this or this?
Should I go here or there? Should I pick this or that? Should I
be with this person or that person? Should I go forward or backward?
We drive ourselves crazy trying to make the right decision. We choose
one decision only to turn around and desperately choose the opposite.
Let us look at what we are trying to accomplish with our decisions.
For most of us making a decision comes from a place of avoidance.
We attempt to make a decision where we can avoid certain feelings.
We try to find a decision that is comfortable for us. So, we
vacillate back and forth between decisions in an attempt to avoid
uncomfortable feelings. "Give me a decision that is comfortable!"
Truly, most decisions are not comfortable for we are called upon to
make decisions that take us beyond our limitations, beyond what has
blocked and contained us. We are called upon to make decisions that
take us out of our old patterns and beliefs. This is not always
comfortable. If we expect to find a comfortable decision, we will
avoid making a decision.
To release our difficulty with making decisions, are we willing to be
present with whatever feelings that arise from that decision? It is
all about being present with whatever we decide - uncomfortable
feelings and all. Avoiding these feelings is usually why we put off
decisions - we are afraid of the feelings that the decision brings.
The second thing we try to avoid is making the "wrong" decision.
We are often afraid to make any decision just in case it is the
"wrong" one. If we enter the arena of "right and wrong", making
decisions will be very frustrating and confining indeed.
The solution is simply this: "Am I willing to be present with whatever
I decide and invite the very best to occur? Am I willing to see that
whatever decision I give to my Higher Power can be used for
healing?
Prayer:
God, would You help me to be present with whatever I decide.
Would You help me to feel whatever feelings are connected with
this decision so I may be present for what is best.
Would You help me to see that, ultimately, my real decision is
to be with You, to be guided by Your Wisdom, Your Peace,
Your Direction.
Please help me see that when I am present with You, decisions
unfold in the best way possible.
For your consideration,
-- The Guides
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