Tuesday, April 29, 2008

Should You Buy A Home Or Should You Keep On Renting?


If you currently don't own your own home you might be wondering.... should I take on a mortgage loan and buy a house or should I just keep renting?

To figure the question out of mortgage loan or rent, you need to do an analysis on the cash flows of buying a home and mortgage verses renting. Also you would need to determine the length of time that you plan to live in the home or area.


The cash outflows from renting would be:
  1. A security deposit
  2. Utilities
  3. Monthly rent.


The cash inflows would be:

  1. The deposit returned when you leave
  2. Any monthly savings in the difference of a lower rent payment verses a home payment.

When buying a house the cash outflows include:

  1. The down payment on the house
  2. Points, closing costs
  3. Mortgage payment
  4. Property taxes
  5. Insurance
  6. Home maintenance costs
  7. Utilities
  8. If the house eventually sells for less than the purchase price.

The cash inflows :

  1. Tax deductions for interest, points, and property taxes
  2. Any rental income from the home
  3. The appreciated value if the home sells for more than the purchase price.

Also consider the length of time that you plan to stay in the area. If you plan to stay for many years then buying a home might have an advantage--a fixed rate monthly mortgage payment will stay pretty much the same over the course of time that you spend there where your rent payment will increase to keep up with the rising rate of inflation and the supply and demand of apartments or rentals.

If you plan to stay a short period of time then renting might be a better option because of the cost of the down payment,points and fees associated with buying the home.




Thursday, April 10, 2008

Stretching Your Retirement Buck--The Reverse Mortgage


As my mom spins into retirement she is on a never ending quest to increase her retirement income and make her life more enjoyable. At some point I suggested that she check out reverse mortgages and see if that would work out for her. She loved the idea and applied for the loan. She loves her home and it's in a good safe neighborhood so, she has no interest in selling her house and moving to use the equity. The reverse mortgage increased her income by over four hundred dollars a month and she has been delighted with the extra money.

Many people aren't aware of reverse mortgages. If you own your own home and have equity built up in it, you should consider a reverse mortgage to help generate extra income as you retire and make your life more comfortable.
You need to be 62 or older to obtain a reverse mortgage and how it works is that You obtain a loan based a percentage of the equity in your home. The lender will pay you monthly payments depending on the terms of the agreement usually until the day you die or until you move out of your home. In the end your home is sold to repay the loan--usually after you die, (grim huh?) If you decide to try out a reverse mortgage read the terms of the agreement carefully and ask any questions of the lender that you might have. It's something to think about anyway.

Monday, April 7, 2008

The Home Equity Line of Credit


If you have equity built up in your home consider applying for a home equity line of credit. Home equity, which is the difference between the market value of your home and the outstanding balance of your mortgage can be used as an asset to secure lines of credit. Is it a good idea to use the equity in your home to secure a loan?


The good points of using your home equity for a loan are:


  1. Because it is a secured loan interest rates are lower than other forms of consumer credit
  2. The interest paid on a home equity line of credit is tax deductible.
  3. No repayment obligation exists until funds from the home equity line of credit have been accessed.

The drawback of using the equity of your home to secure a home equity line of credit or a second mortgage is that if you can't repay the loan you will be forced to sell your home to pay the debt. In some areas where home values have dropped you could find yourself owing more then the home is worth. If you wind up in this situation the home will be sold and the original home lender will be paid off but the remaining balance of your home equity loan will still be owed by you.

Thursday, April 3, 2008

The lovers and Haters of Wolves.


The first light of the day is starting to break and I am on my second cup of coffee--I love Starbucks Kenya coffee. A huge owl is sitting on my roof outside and his song is the only sound I can hear. It is a peaceful and relaxing calm. Ill try not to be too superstitious about it. The last time I had an owl stop by I had a death in the family.

A friend of mine asked me to look at a website called Save Our Elk and I have been checking it out this morning. http://saveourelk.com/

It looks basically like an anti-wolf pro-hunter website with rather graphic pictures of elk that have been killed by wolf packs. The website didn't excite me too much after all the elk is the natural prey of the wolf but, looking at the pictures the wolves do look like vicious and wanton killers. I would hate to see this devastation in livestock herds or my own pets or children. When it comes to protection, my son's BB-gun just isn't going to cut it, I can tell. The website talks about the decimation of the elk herds and how the wolves will kill just for sport. Looking at the website you can understand why ranchers, hunters, and the people living in this area would be concerned about the growing wolf packs and the desire for an effective management program.

Just so you know from the get-go I have always loved wolves. They are one of my favorite animals and I know quite a bit about them. Several years ago when the government decided to reintroduce Canadian Grey Wolves into Idaho it worried me considerably. As desolate and wild as Idaho still is, it isn't desolate enough for packs of wolves to populate at the rapid pace that is now occurring. A wolf can travel 60 miles in one day bringing him into populated areas or ranch lands.

A rancher friend of mine called me last night and told me that they are branding this afternoon. I was invited out to a ranch last fall and watched them brand the calves. It's a way of life that is far removed from the urban sprawl and super centers. The range land was beautiful and undeveloped with rivers,cottonwood trees turning yellow leaves and sagebrush every where with elk and deer herds sharing the land. It was dry and dusty but sunny and crisp--a typical fall afternoon. They drove me out to the corral in their pick-up--thank God they didn't ask me to bring my own horse! She is a big Thoroughbred and has out grown her horse trailer and I have never replaced it. They herded the calves into a corral and the cowboys and cowgirls roped the calf, branded it, and then castrated it all with in a five minute period and then the calf trotted out.