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        <atom:link href="http://www.minneapolisurbanhomes.com/blog/2018-12/rss/" rel="self" type="application/rss+xml" />
        <title>Real Estate Blog</title>
        <link>http://www.minneapolisurbanhomes.com/blog/2018-12/</link>
        <description></description>
<item>
    <guid>https://www.minneapolisurbanhomes.com/blog/how-to-save-thousands-of-dollars-in-interest-on-your-mortgage.html</guid>
    <link>https://www.minneapolisurbanhomes.com/blog/how-to-save-thousands-of-dollars-in-interest-on-your-mortgage.html</link>
        <author>richard@drgmpls.com (Richard Newman)</author>
        <title>How to Save Thousands of Dollars in Interest on Your Mortgage</title>
    <description> <![CDATA[ 







One of the most common loans you can get to buy a home is a 30-year fixed rate mortgage. If the thought of paying for your home over the course of 30-years seems daunting, here are some easy ways to shorten that term which will actually end up saving you money over the life of your loan.


Any additional payments to the principal amount (the original sum of money borrowed in a loan), helps to cut down the amount of interest that you will pay over the life of your loan and can also help to shave years off the loan as well.


When you make ‘extra’ payments toward your loan, the key is to let your lender/bank know that you want the extra funds to go toward your principal balance as they will not automatically do this for you.


You don’t have to double your mortgage payment to make a big difference either


If you have a 30-year mortgage on a median-priced home ($250,000) with a 5 interest rate, you’ll be responsible for a $1,342.05 monthly principal and interest payment. Over the course of the loan, if you pay your exact monthly payment, you will have paid $233,133.89 in interest alone


Paying a Little Extra Can Pay Off Big


1. Pay an additional 1/12th of your mortgage payment every month


Benefit: In the example above, adding $111.84 to your monthly mortgage payment might not seem like a lot, but each year you will have paid one extra month’s worth of payments which will shorten the term of your loan by 4 years and 8 months, all while saving you $42,000 in interest


2. Pay an additional $50 per month towards your mortgage


Benefit: Fifty dollars might not seem like enough to make a difference on the term of your loan, but that small amount will save you over $21,000 in interest and will take over 2 years off the end of your loan. Twenty-eight years from now, you’ll be happy to pay off your loan that much sooner


3. Make one-time lump sum payments when you can


Benefit: If you find yourself with a little extra money after a yearly bonus, a tax return, or from investment dividends, paying that money towards the principal can cut your costs. This option, however, is less predictable than the extra monthly payments.


If you have higher interest debts, like credit cards, consider using any extra funds you have to pay those debts down before applying that money towards your mortgage. Also, if you do not plan on staying in your home for more than 10 years, paying extra toward your mortgage might not make sense.


Bottom Line


If you’re wondering what strategies would work best for you to shorten the term of your loan, let’s get together to answer your questions.


 


From Keeping Current Matters, 12/26/18


 ]]> </description>
    <pubDate>Wed, 26 Dec 2018 12:03:00 -0600</pubDate>
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    <guid>https://www.minneapolisurbanhomes.com/blog/4-quick-reasons-not-to-fear-a-housing-crash.html</guid>
    <link>https://www.minneapolisurbanhomes.com/blog/4-quick-reasons-not-to-fear-a-housing-crash.html</link>
        <author>richard@drgmpls.com (Richard Newman)</author>
        <title>4 Quick Reasons Not to Fear a Housing Crash</title>
    <description> <![CDATA[ 









There is a lot of uncertainty regarding the real estate market heading into 2019. That uncertainty has raised concerns that we may be headed toward another housing crash like the one we experienced a decade ago.


Here are four reasons why today’s market is much different:


1. There are fewer foreclosures now than there were in 2006


A major challenge in 2006 was the number of foreclosures. There will always be foreclosures, but they spiked by over 100 prior to the crash. Foreclosures sold at a discount and, in many cases, lowered the values of adjacent homes. We are ending 2018 with foreclosures at historic pre-crashnumbers – much fewer foreclosures than we ended 2006 with.





2. Most homeowners have tremendous equity in their homes


Ten years ago, many homeowners irrationally converted much, if not all, of their equity into cash with a cash-out refinance. When foreclosures rose and prices fell, they found themselves in a negative equity situation where their homes were worth less than their mortgage amounts. Many just walked away from their houses which led to even more foreclosures entering the market. Today is different. Over forty-eight percent of homeowners have at least 50 equity in their homesand they are not extracting their equity at the same rates they did in 2006.





3. Lending standards are much tougher


One of the causes of the crash ten years ago was that lending standards were almost non-existent. NINJA loans (no income, no job, and no assets) no longer exist. ARMs (adjustable rate mortgages) still exist but only as a fraction of the number from a decade ago. Though mortgage standards have loosened somewhat during the last few years, we are nowhere near the standards that helped create the housing crisis ten years ago.





4. Affordability is better now than in 2006


Though it is difficult to afford a home for many Americans, data shows that it is more affordable to purchase a home now than it was from 1985 to 2000. And, it requires much less of a percentage of your income today than it did in 2006.





Bottom Line


The housing industry is facing some rough waters heading into 2019. However, the graphs above show that the market is much healthier than it was prior to the crash ten years ago.


From Keeping Current Matters, 12/20/18


 





 ]]> </description>
    <pubDate>Thu, 20 Dec 2018 11:29:00 -0600</pubDate>
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    <guid>https://www.minneapolisurbanhomes.com/blog/3-year-end-steps-for-every-renter1.html</guid>
    <link>https://www.minneapolisurbanhomes.com/blog/3-year-end-steps-for-every-renter1.html</link>
        <author>richard@drgmpls.com (Richard Newman)</author>
        <title>3 Year End Steps for Every Renter</title>
    <description> <![CDATA[ 







Along with year-end parties, comes New Year goal setting, right? It’s time to look forward and envision where you see yourself this time next year. Is owning a home on your list of goals?


Before you stumble upon that dream home while out looking at holiday lights, take these three simple year-end steps that will jump start your journey to homeownership. You’ll be well on your way to a new home before that New Year’s Eve countdown begins. 


1. Simple budget review


How much are you currently spending each month on rent and other housing related expenses, like utilities? What is that amount annually? Do you anticipate any rent increases?


Take a look at your other expenses too. You want to have a solid understanding of your monthly income and expenses so you know what you can handle for a mortgage payment. This exercise will keep you from jumping into a mortgage payment that stretches you and your family too far.


And, with homeownership comes home maintenance so it’s important to have a cushion for those necessary (and sometimes fun) projects.


2. Interview lenders


Mortgages are never one size fits all. You want to work with a lender who can listen to your goals and budget to find the best fit for you. Make a plan to talk to at least three lenders before year end. Learn about their low down payment options, fees and the monthly and lifetime cost of your mortgage.


Check out our five essential lender interview questions for a guide on what to ask prospective mortgage lenders.


3. Search for down payment programs


Do you know about homebuyer programs that can help you save on your down payment and closing costs? Down payment programs can give you a major homeownership boost in the form of grants, forgivable loans and tax credits. But, they also require approvals and paperwork so you want to get your options on the table soon.


Investigate what’s available in the area you plan to buy. Use our program finder to answer a few question about your household to narrow down your options.


Good luck and happy New Year


 


From Down Payment Resource, 12/20/18


 ]]> </description>
    <pubDate>Thu, 20 Dec 2018 08:55:00 -0600</pubDate>
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    <guid>https://www.minneapolisurbanhomes.com/blog/no-bubble-here-how-new-mortgage-standards-are-helping.html</guid>
    <link>https://www.minneapolisurbanhomes.com/blog/no-bubble-here-how-new-mortgage-standards-are-helping.html</link>
        <author>richard@drgmpls.com (Richard Newman)</author>
        <title>No Bubble Here  How New Mortgage Standards Are Helping.</title>
    <description> <![CDATA[ 







Real estate is shifting to a more normal market; the days of national home appreciation topping 6 annually are over and inventories are increasing which is causing bidding wars to almost disappear. Some see these as signs that the market will soon come tumbling down as it did in 2008.


As it becomes easier for buyers to obtain mortgages, many are suggesting that this is definite proof that banks are repeating the same mistakes they made a decade ago. Today, we want to assure everyone that we are not heading to another housing “bubble &amp; bust.”


Each month, the Mortgage Bankers’ Association (MBA) releases a measurement which indicates the availability of mortgage credit known as the Mortgage Credit Availability Index (MCAI). According to the MBA:




“The MCAI provides the only standardized quantitative index that is solely focused on mortgage credit. The MCAI is calculated using several factors related to borrower eligibility (credit score, loan type, loan-to-value ratio, etc.).” *




The higher the measurement, the easier it is to get a mortgage. During the buildup to the last housing bubble, the measurement sat at around 400. In 2005 and 2006, the measurement more than doubled to over 800 and was still at almost 600 in 2007. When the market crashed in 2008, the index fell to just over 100.


Over the last decade, as credit began to ease, the index increased to where it is today at 186.7 – still less than half of what it was prior to the buildup of last decade and less than one-quarter of where it was during the bubble.


Here is a graph depicting this information (remember, the higher the index, the easier it was to get a mortgage):





Bottom Line


Though mortgage standards have loosened somewhat during the last few years, we are nowhere near the standards that helped create the housing crisis ten years ago.


 


From Keeping Current Matters, 12/13/18


 ]]> </description>
    <pubDate>Thu, 13 Dec 2018 09:38:00 -0600</pubDate>
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    <guid>https://www.minneapolisurbanhomes.com/blog/dont-get-caught-in-the-rental-trap-in-2019.html</guid>
    <link>https://www.minneapolisurbanhomes.com/blog/dont-get-caught-in-the-rental-trap-in-2019.html</link>
        <author>richard@drgmpls.com (Richard Newman)</author>
        <title>Don't Get Caught in the Rental Trap in 2019</title>
    <description> <![CDATA[ 









Every year around this time, we take time to reflect and plan for next year. If you are renting your current home but have dreams of homeownership, your plan for the new year may include buying, and you wouldn’t be alone


According to the 2018 Bank of America Homebuyer Insights Report, 74 of renters plan on buying in the next 5 years, with 38 planning to buy in the next 2 years


When those same renters were asked why they disliked renting, 52 said that rising rental costs were their top reason, and 42 of renters believe that their rent will rise every year. The full results of the survey can be seen below:





It’s no wonder that rising rental costs came in as the top answer The median asking rent price has risen steadily over the last 30 years, as you can see below





There is a long-standing rule that a household should not spend more than 28 of its income on housing expenses. With nearly half of renters (48) surveyed already spending more than that, and with their rents likely to rise again… why are they renting?


When asked why they haven’t purchased a home yet, not having enough saved for a down payment (44) came in as the top response. The report went on to reveal that nearly half of all respondents believe that “a 20 down payment is required to buy a home.”


If the majority of those who believe they haven’t saved a large enough down payment believe that they need 20 down to buy, that means a large number of renters may be able to buy now


Bottom Line


If you are one of the many renters who is fed up with rising rents but may be confused about what is required to buy in today’s market, let’s get together to help you on your path to homeownership.


 


From Keeping Current Matters, 12/12/18





 ]]> </description>
    <pubDate>Wed, 12 Dec 2018 15:23:00 -0600</pubDate>
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    <guid>https://www.minneapolisurbanhomes.com/blog/how-to-simply-increase-your-family-wealth-by-paying-for-housing.html</guid>
    <link>https://www.minneapolisurbanhomes.com/blog/how-to-simply-increase-your-family-wealth-by-paying-for-housing.html</link>
        <author>richard@drgmpls.com (Richard Newman)</author>
        <title>How to Increase Your Family Wealth by Paying for Housing</title>
    <description> <![CDATA[ 







Everyone should realize that unless you are living somewhere rent-free, you are paying a mortgage – either yours or your landlord’s. Buying your own home provides you with a form of ‘forced savings’ that allows you to use your monthly housing costs to increase your family’s wealth.


Every month that you pay your mortgage, you are paying off a portion of the debt that you took on to purchase your home. Therefore, you own a little bit more of your home every month in the form of home equity. As your home’s value increases you also gain home equity.


Every quarter, Pulsenomics surveys a nationwide panel of over 100 economists, real estate experts, and investment and market strategists and asks them to project how residential home prices will appreciate over the next five years for their Home Price Expectation Survey (HPES).


The latest data from their Q4 2018 Survey revealed that home prices are expected to round out the year 5.8 higher than they were in January. For the next 5 years, home values will appreciate by an average of nearly 3 a year.


This is still great news for homeowners


For example, let’s assume a young couple purchases and closes on a $250,000 home in January. Simply through their home appreciating in value, those homeowners can build their home equity by nearly $40,000 over the next five years.





Let’s look at the potential equity gained over the same period of time at some higher price points:





In many cases, home equity is a large portion of a family’s overall net worth.


Bottom Line


If your plan for 2019 includes entering the housing market to purchase a home, whether it’s your first or your fifth, let’s get together to make your plan a reality


 


From Keeping Current Matters, 12/11/18


 ]]> </description>
    <pubDate>Tue, 11 Dec 2018 09:15:00 -0600</pubDate>
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    <guid>https://www.minneapolisurbanhomes.com/blog/what-if-i-wait-a-year-to-buy-a-home.html</guid>
    <link>https://www.minneapolisurbanhomes.com/blog/what-if-i-wait-a-year-to-buy-a-home.html</link>
        <author>richard@drgmpls.com (Richard Newman)</author>
        <title>What If I Wait a Year to Buy a Home?</title>
    <description> <![CDATA[ 









National home prices have increased by 5.4 since this time last year. Over that same time period, interest rates have remained near historic lows which has allowed many buyers to enter the market and lock in low rates.


As a seller, you will likely be most concerned about ‘short-term price’ – where home values are headedover the next six months. As a buyer, however, you must not be concerned about price but instead about the ‘long-term cost’ of the home.


The Mortgage Bankers Association (MBA), Freddie Mac, and Fannie Mae all project that mortgage interest rates will increase by this time next year. According to CoreLogic’s most recent Home Price Insights Report, home prices will appreciate by 4.8 over the next 12 months.


What Does This Mean as a Buyer?


If home prices appreciate by 4.8 over the next twelve months as predicted by CoreLogic, here is a simple demonstration of the impact that an increase in interest rate would have on the mortgage payment of a home selling for approximately $250,000 today:





Bottom Line


If buying a home is in your plan for this year, doing it sooner rather than later could save you thousands of dollars over the terms of your loan.


 


From Keeping Current Matters, 12/10/18





 ]]> </description>
    <pubDate>Mon, 10 Dec 2018 11:22:00 -0600</pubDate>
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    <guid>https://www.minneapolisurbanhomes.com/blog/a-tale-of-two-markets.html</guid>
    <link>https://www.minneapolisurbanhomes.com/blog/a-tale-of-two-markets.html</link>
        <author>richard@drgmpls.com (Richard Newman)</author>
        <title>A Tale of Two Markets</title>
    <description> <![CDATA[ 







Some Highlights:




An emerging trend for some time now has been the difference between available inventory and demand in the premium and luxury markets and that in the starter and trade-up markets and what those differences are doing to prices


Inventory continues to rise in the luxury and premium home markets which is causing prices to cool.


Demand continues to rise with lower-than-normal inventory levels in the starter and trade-up home markets, causing prices to rise on a year-over-year basis for 80 consecutive months.




From Keeping Current Matters, 12/7/18


 ]]> </description>
    <pubDate>Fri, 07 Dec 2018 12:53:00 -0600</pubDate>
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    <guid>https://www.minneapolisurbanhomes.com/blog/where-are-interest-rates-headed-in-2019.html</guid>
    <link>https://www.minneapolisurbanhomes.com/blog/where-are-interest-rates-headed-in-2019.html</link>
        <author>richard@drgmpls.com (Richard Newman)</author>
        <title>Where Are Interest Rates Headed in 2019?</title>
    <description> <![CDATA[ 









The interest rate you pay on your home mortgage has a direct impact on your monthly payment. The higher the rate, the greater the payment will be. That is why it is important to know where rates are headed when deciding to start your home search.


Below is a chart created using Freddie Mac’s U.S. Economic &amp; Housing Marketing Outlook. As you can see, interest rates are projected to increase steadily throughout 2019.





How Will This Impact Your Mortgage Payment?


Depending on the amount of the loan that you secure, a half of a percent (.5) increase in interest rate can increase your monthly mortgage payment significantly. But don’t let the prediction that rates will increase stop you from purchasing your dream home this year


Let’s take a look at a historical view of interest rates over the last 45 years.





Bottom Line


Be thankful that you can still get a better interest rate than your older brother or sister did ten years ago, a lower rate than your parents did twenty years ago, and a better rate than your grandparents did forty years ago.


 From Keeping Current Matters, 12/5/18





 ]]> </description>
    <pubDate>Wed, 05 Dec 2018 10:36:00 -0600</pubDate>
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