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How Paying Off A Mortgage Builds Wealth
March 10, 2017 /Few homeowners are likely to say that they enjoy making monthly mortgage payments. Fulfilling an essential financial duty might be satisfying in the same way that cleaning one’s room or emptying the dishwasher is satisfying, but few people are likely to relish the act of paying off a mortgage. Which is strange, because most people enjoy receiving checks in the mail. While paying for a mortgage and receiving a paycheck aren’t quite the same, the comparison highlights an important feature of owning a home and having a mortgage: both are far better at building wealth than renting. The classic argument for this idea is that, while rent checks pay for a physical space that the renter will never own, a mortgage payment finances a piece of property that will one day be owned completely by the occupant. However, while this reasoning is perfectly sound, it also misses a key factor in a mortgage’s wealth-building power: mortgage payments contribute to building home equity, while rent payments do not. Let’s say, for example, that you’ve just bought a $250,000 house using a 30-year FRM. The beauty of this loan is that, no matter what the market does in the three decades following…Read more
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How I Got The Gumption: The FHA 203K Loan
March 3, 2017 /Sometimes, renovations can cause even the mildest mannered homeowner to panic. After all, home improvements can be costly and stressful. However, when Pickett Street’s very own Margaret Smith, Director of Operations, decided to purchase a vacant, bank owned fixer-upper, the FHA 203K Loan presented her with an opportunity that turned the process into a dream come true. Margaret bought her duplex in south Everett near Paine Field in August 2014. It was a bank owned property, meaning nobody had been living there for over a year. The previous owners had gone into foreclosure, so the home sat there vacant, lacking love and attention. The upstairs unit was a 3 bed, 1 bath layout that Margaret planned to rent out. It needed a new bathroom, new washer and dryer, a fresh coat of paint on the laundry room walls, and an all-around thorough scrubbing. The bottom unit was a 2 bed, 1 bath layout that was perfect for Margaret and a roommate. That 2 bed unit also needed a new bathroom, new kitchen and new vinyl wood flooring (which also needed to be leveled). The bottom half of the duplex’s exterior required a new paint job, and some general TLC. The…Read more
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Landmarks of Washington State: The Fremont Troll
February 20, 2017 /When my parents told me we were going to see the troll under the bridge, I was a little worried. For one thing, I was five years old, the age when one still imagines that monsters live under the bed. Also, I’d originally been told that we were going to the beach: as recent transplants from New Jersey, my parents failed to realize that Washingtonians don’t visit any kind of seaside locale outside of August, and so they’d promised to drive the family to Alki Beach on February 15th, 1995. You can imagine my dismay when we arrived and found a grey waste of fog and mist hovering over the steely edge of the Puget Sound. As I recall, my tiny Hawaiian shirt, flip-flops, and white tube socks (essentially the miniature version of a middle-aged man’s attire during a vacation to Miami) were particularly unsuitable for the situation. Since there was little point building sandcastles in 30 degree weather, my parents came up with a backup activity: visiting the Fremont Troll. Though the Fremont Troll has become a major Seattle landmark, back then it was a relatively new addition to the city. The troll (which, for no apparent reason, I’ve…Read more
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Five Tax Breaks for Homeowners
February 10, 2017 /Now that it’s February, most of us have probably emerged from our flabbergasted holiday stupors and (with the help of a strong cup of coffee), finally achieved normalcy just in time for tax season. However, before you panic and begin overturning couch cushions to find the receipts you foolishly lost back in September, it’s useful to remember that plenty of helpful tax breaks exist for homeowners. Tax breaks for homeowners vary widely according to each person’s unique situation. Even so, it helps to be aware of the general options available for homeowners looking to save money during the tax season. Read on to learn more about how your home can help you save money when it comes time to file. Deductions for Mortgage Interest The interest American homeowners pay on a mortgage is tax deductible. For those who are married and filing jointly, it’s possible to deduct your interest payments for mortgages totaling as much as $1 million. Additionally, private mortgage insurance payments are deductible for those homeowners who took on a mortgage after 2006. Overall, these tax breaks make a big difference when it comes to alleviating the financial burden of homeownership. In fact, in 2011 American homeowners benefited…Read more
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No Need to Fear the Downpayment
February 3, 2017 /New homeowners are liable to get nervous when it comes to applying for a mortgage. Many people have trouble sifting through the real estate terminology and the legal requirements of buying a home. However, if there was one aspect of buying a home that makes people the most nervous, it’s probably the downpayment. If making a downpayment is stressing you out, you should know there are many ways to obtain downpayment assistance, or even secure a mortgage without any downpayment at all. So, if you’re a buyer who wants to make a very low down payment or avoid one altogether and maintain maximum liquidity, check out some of the options outlined below. State Bond Loans In general, State Bond Loans help buyers secure a loan at below-market interest rates. The exact rates offered through State Bond Loans vary, but they generally increase long-term affordability and decrease monthly home payments. These bonds are available through local housing agencies, which sell tax-exempt mortgage revenue bonds and then use the income from these sales to offer below-market rate loans to buyers. This type of loan looks a little different depending on the state you’re living in. The Washington State Housing Finance Commission is the organization…Read more
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Who’s Afraid of the FHA?
January 12, 2017 /At the beginning of the week, the Federal Housing Administration announced it will decrease its annual mortgage insurance premiums by .25% annually or from .85% to .6% per year. This measure will go into effect for new mortgages closing or starting disbursement on or after January 27, 2017. This is the first reduction in insurance premiums since January 2015, when the FHA reduced premiums by 50 basis points. While this decrease might seem modest, experts estimate that it is likely to save consumers hundreds of dollars each year. For instance, with this reduction a homeowner with a $200,000, 30-year fixed rate mortgage can expect to save about $500 annually. Looking at the larger picture, it’s expected that the reduction in insurance premiums will in total save $5 million for about 1 million borrowers. The announcement arrived on the heels of the FHA’s fourth straight year of economic health. In fact, since 2012 the FHA has reportedly increased its assets by over $40 billion. With such successful economic growth, the FHA has determined that offering lower prices to borrowers is fiscally responsible. The FHA’s decision further cements its importance for prospective homeowners. Since the Great Recession, FHA loans have been vital…Read more
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New Year’s Reflections (Or, How I Learned to Stop Worrying and Love the Broken Toilet)
January 6, 2017 /If you had been in my family’s living room at about 2:30 on Christmas morning, you might have heard urgent mutterings and a disturbing hissing sound coming out from under the bathroom door. Had you ventured to inspect the situation further, you would have observed my stepfather and I as we removed the cap of the toilet tank, endured a generous vertical explosion of water, and fumbled with the toilet’s innards for several feeble minutes before replacing the cap and catching our breath. You would have watched us repeat this cycle for quite some time. It’s hard to come up with fresh ideas when your face is repeatedly doused with cold toilet tank water, after all. You might wonder how I got myself into such a situation in the wee hours before dawn on Christmas. It all began when I woke up at about 2 o’clock in the morning to the sound of the toilet running upstairs. Now, the bathroom in my childhood home has been subject to all kinds of problems (sharing one toilet and shower between 7 people puts quite a lot of stress on the pipes, as it turns out), and though the house’s plumbing has limped…Read more
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Energy, intensity, spirit, strength and spark.
December 22, 2016 /By Executive Assistant, Margaret Smith Definition of energy: Measure of the ability of a body or system to do work or produce a change, expressed usually in joules or kilowatt hours (kWh). No activity is possible without energy and its total amount in the universe is fixed. In other words, it cannot be created or destroyed but can only be changed from one type to another. Definition found here: http://www.businessdictionary.com/definition/energy.html I think about this idea of energy transferring between people at least once per day, if not more. It’s been apparent to me for a long time that certain people have the ability to transfer massive amounts of energy in a room, either up or down- but it can’t ever be removed or destroyed as the definition mentions above. Diana Kokoszka, Chief Executive Officer for KW MAPS Coaching first brought the topic of your energy to the forefront of my mind last summer, 2015. I was in Austin, Texas with Jesse D. Moore & Katie Silver at Coaching Skills Camp. We spent 2 days learning as much as we could from Diana and Tony DiCello about coaching, leading and bringing our teams together. Diana talked a lot about how she realized…Read more
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It’s a Christmas Miracle!
December 16, 2016 /Each holiday season, I like to kick back and remember the time my family banded together to roll a derelict hot tub down the road on Christmas Eve. The particular Christmas I’m about to describe would have been strange enough without the aforementioned tub. For one thing, it snowed about a foot that year, a curious and sensational occurrence in the Puget Sound, one liable to cause widespread panic in the streets (curiously, us Northwesterners can endure years of nonstop rain with stoic indifference, but the lightest dusting of snow results in pandemonium and chaos). Additionally, we lost electricity for the week leading up to Christmas Eve morning, meaning my poor mother’s preparations for our annual holiday party (normally a three week affair, if you don’t count the additional six months of initial planning) were squeezed into a mere six hours. To top things off, I had pretty extensive oral surgery just a few days before the festivities, so I spent much of the holiday sitting in a corner in a peaceful, painkiller-induced haze. As I said, all of this would have been enough strangeness for one Christmas, even without the hot tub. The tub in question appeared as if…Read more
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Education = Power.
December 2, 2016 /Mortgage Rates on the Rise as Equities Recover As expected, mortgage rates climbed during Thanksgiving week as equities recovered based on speculation of economic expansion. In fact, these market conditions led the Dow Jones Industrial Average to record highs. In general, with election season fading into the rearview mirror and with Trump beginning to assemble the foundations for his political team, it’s expected that markets will return to a sense of normalcy after their initial uncertainty. That’s not to say that we won’t see any more volatility; in fact, market experts expect that, even if things are settling down now, we should expect a few more market surprises in the foreseeable future. Any political concerns aside, it’s important to note that mortgage rates are increasing, just as this blog has predicted on numerous occasions. More specifically, just before Halloween, the average 30-year APOR was about 3.52%. By the end of the first week in November, that rate had recorded a modest increase and risen to 3.58%, while it rose again the following week to 3.61%. By the end of Thanksgiving week, the average 30-year APOR had increased to about 3.98%. Likewise, MarketWatch estimates that the average 30-year FRM has…Read more
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The Preposterous Rituals of Turkey Day
Call me sentimental, but my mind is wholly occupied with turkey and potatoes today. Thanksgiving in my household was always a bit of a confusion, partly because we never knew exactly who might show up for dinner. As a local pastor, my father maintained a more or less constant open-door-policy with his parishioners, meaning that all 300 members of the congregation were theoretically welcome when it came time to carve the turkey. In addition to this prodigious crowd, my father’s property generally played host to an eclectic assortment of animals, including, but not limited to, one cat, one dog, two parakeets, three obese chickens, and two stupendously moronic goats (Dad was an urban farmer before the role was co-opted by bespectacled twenty-somethings from Brooklyn), all of whom seemed fond of wandering in and out of the house with a blatant disregard for both basic social etiquette and screen doors. All in all, Clark Thanksgivings were usually characterized by barely managed yet jovial chaos, making them pretty standard affairs as far as holidays go. And yet, this craziness was an important part of my home’s identity. My childhood wouldn’t have been the same without the sound of gravy burbling on the…Read more
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What Do We Pay Real Estate Agents For?
November 9, 2016 /These days, a large swath of the population seems fond of predicting the imminent decline of the real estate agent. With the newfound ease of viewing homes (along with accompanying neighborhood/community statistics) online, it occasionally seems like the services provided by real estate agents are unnecessary expenses. If that’s your line of thought, then think again: appearances are deceiving. In reality, real estate agents perform far more tasks than merely finding a home for clients, and they are paid for a much more diverse array of services. In fact, the average real estate agent is paid for vital but abstract services that no Internet search can provide, including problem solving and stress/emotional management. So, if you feel like you can handle your home search with a measly tour on Google, read on to see why working with a real estate agent is always the better option. Problem Solving Even the most seamless real estate transactions run into occasional setbacks. Whether you lose a bidding war on your dream home, or the home you’re about to close a deal on requires unexpected renovations, buying a home almost always involves at least one unforeseen hiccup. This observation is not meant to discourage…Read more
