How Would You Pay For Home Improvements: Cash Or Loan?

Finding The Best Bang For Your Home Improvement Buck

by in Personal Finance on Apr 29th, 2013

Now that the real estate market is showing signs of upward movement, some people will be thinking about upgrading. A lot of folks sucked it up during the downturn and now they want a bigger home for their kids, a better location for a shorter commute, or a smaller property to keep maintenance down.

Before you sell, your home probably could use some improvements to garner as much buying interest. The dilemma is: How much more cash are you willing to tie up in your home? Imagine plopping down $10,000 to remodel a bathroom and nobody ends up buying the place for your asking price? You don’t want to be house rich but cash poor.

With this in mind, you might consider taking out a HELOC or doing a cash out refinance instead to release some equity in order to make home improvements or fix necessary things such as a leaky roof.

Whilst this in itself is not a bad idea, it pays to consider all options and consider if releasing equity will damage the prospects of re-mortgaging for your new property.

Is equity finance your only option? Read More

Things To Know About The Extended HARP Program

by in Personal Finance on Apr 19th, 2013

It’s still difficult to afford a home despite low interest rates and a recovering economic environment due stiff lending standards by banks. Add on the fact that many home values have still not fully recovered from pre-crisis levels, and it’s easy to see why help is needed. Owners of these homes usually cannot qualify for traditional refinancing. The HARP ( Home Affordable Refinance Program) was introduced to allow these owners to refinance their homes after the housing market collapsed in 2006-2007.

HARP Qualifications

1) The mortgage firstly must be owned by Freddie Mac or Fannie Mae. If the mortgage was not sold to either Freddie Mac or Fannie Mae before 31st May 2009, it won’t qualify for refinancing.

2) The loan to value ratio at the time of refinancing must be above eighty percent.

3) The homeowner must show him or herself to be a responsible homeowner by making timely payments at least in the past twelve months prior to refinancing.

4) The mortgage cannot be refinanced under HARP twice unless the first refinancing came between March 2009 and May 2009 under Fannie Mae. Read More

Is Now The Time To Sell My House?

Only If You Are Forced To Sell

by in Personal Finance on Jun 21st, 2012

According to real estate agents, it’s always a good time to buy or sell! I’m relieved to say that after putting my house on the Multiple Listing Service (MLS) for 3.5 weeks at the urging of my Realtor, I withdrew the listing and decided to stay!

My Realtor is a friend who kept pushing me for at least a year to list my house with him. Even though I just refinanced my 5/1 ARM from 3.125% to 2.625%, he convinced me to give it a go given the lack of inventory and pent up demand. Besides, with Facebook’s IPO this past May, there will be an eventual surge of liquidity once the first lock up tranche expires at the end of August.

I told them that I wasn’t interested in selling, but if he thought I could get a price 5%+ higher than current comparables due to this mini-frenzy we have, then I wouldn’t mind at least trying. And so, I went on vacation for 10 days while he put my house on the market. Over 50 Realtors came to visit and we had at least 15 private showings with clients. Five offers were forthcoming, but I told them that if it wasn’t for at least full asking price, I wasn’t interested.

Given I was very steadfast in my desire for a 5%+ higher price than comparables, I think I scared buyers away through my Realtor. One couple came three times and needed to move out of their rented apartment by August 1 due to the start of the school year for their two kids. They were willing to bid a reasonable price in the current environment, but I really just couldn’t be bothered if it was under asking. If they were desperate to move and loved the house, then what’s an extra $50,000-$100,000 right?

WHY DEEP DOWN I DIDN’T WANT TO SELL MY HOUSE Read More

Look Beyond Short Term Profits For Long Term Gains

Stubbornness Will Not Make You Rich

One of the discussions that came up with my real estate agent and I is the commission rate.  At first, he wanted 6% until I told him point blankly, “No way in hell you silly goose!”  We ultimately agreed on 5%, which is split 2.5% to him and 2.5% to the agent who represents the buyers.

5% is still a ridiculous commission rate to charge for selling something so expensive in my opinion.  A $2 million dollar house does not require $90,000 more effort to sell than a $200,000 house.  In fact, selling a $200,000 house might require more effort given the demographic of the buyer!

Instead, there should be a flat fee based on several tiers.  Perhaps $5,000 for houses up to $300,000, and $1,000 more for every $100,000 in house value i.e. $1,000,000 house costs $12,000 to sell, and not $50,000!  Sounds pretty logical and fair don’t you think?

At any rate, I begrudgingly signed the selling agreement with my real estate agent for 5%.  He said his company isn’t allowed to go less than 5%, but he agrees to refund me back X amount of his commissions if sold.  The effective commission cost to me will be closer to 4%, a more digestible amount.

STILL NOT TOO HAPPY ABOUT HIS LACK OF VISION Read More

How To Choose The Right Real Estate Agent / REALTOR®

Testing The Real Estate Market

by in Personal Finance on May 24th, 2012

For the right price, everything is for sale. So when my Realtor friend pitched to put my home on the market given the lack of inventory, low interest rates, pent-up demand, and Google/Facebook/Zynga/Apple/LinkedIn money, I said, “Sure why not!”  It’s estimated that Facebook’s IPO could increase the value of Bay Area property by some $1 billion dollars over the next several years.

I have a single family home in San Francisco that could very well be suitable for a young internet executive couple looking to start a family.  I told my real estate agent that if I don’t get X amount, I’m not selling, and he agreed.  It’s important to manage his expectations, since he’s the one who’s going to be spending all the time staging, marketing, photographing, and showing.

The real estate market is still booming in 2017 and maybe it’s time.

SELLING WHEN YOU DON’T NEED TO SELL FEELS GOOD Read More

If You Want To Get Rich, Stop Messing Around!

Why Be The Worst When You Can Be The Best?

After three open houses and a couple hours of analysis, I thought I picked the top 5 rental candidates with the best financial records, but I was wrong.  All was fine until my fourth and last open house when a 28 year old single guy who graduated from CalTech came in and applied.  He is a software engineer at Google and makes $450,000 a year!  What the……

In addition to his eye-boggling income, he has $400,000 saved up after 6 years of working.  Perhaps some of that is 401K or Google stock, but whatever the case, I was blown away.  The 35 year old cardiologist who makes $300,000 has nothing on this Google guy, partly because the doc is in so much debt and also because he is so anal!  After 20 questions, you’ve got to give a person some breathing room buddy.

When I went to business school, a third of my classmates were engineers because they were the smartest people who were “stuck” making $150,000-$200,000 a year.  They saw their less smart colleagues in sales and marketing move up in the firm and make $300,000+ a year and were envious.  These guys all got 730+ on their GMATs out of 800 and 3.8+ GPAs out of 4.0.  It seemed obvious to me they had a chip on their shoulder and felt like they should be running the place.

The Googler’s applicant simply shattered my belief that engineers face a ceiling.  If you are 28 years old and making $450,000, you are absolutely crushing it.  Only in industries such as private equity, money management, and banking do 28 year olds with 6 years of experience make this kinda dough.  Even if you went to Yale Law School and joined super prestigious Wachtel Lipton, you start off at around a $200,000 base (vs. $160,000 base for the other top 20 corporate law firms) and a potential $100,000 bonus.

The war for talent is on!  So what about the rest of us?

PLEASE STOP MESSING AROUND Read More

Buying And Selling Real Estate Not According To Plan!

Fun Times With A Short Sale Purchase Over Summer "Vacation"

by in Personal Finance on Sep 4th, 2011

Barbara Friedberg, MBA, MS is editor-in-chief of BarbaraFriedberg Personal Finance.com where she writes to educate, inspire, and motivate for wealth in money and life. Learn about personal finance from a real life Portfolio Manager & MBA professor! Stop by the website and download a valuable free eBook, 20 Minute Guide to Investing.

THE BACK STORY

Last February, my husband accepted a new job across the country. After a four year search, he finally found the right match. In April, we visited our new land and in one day, after previewing about 10 properties, bid on a short sale condo. We were warned that purchasing a short sale property was fraught with problems, but we just could not pass up the price!

Although the new job officially started September 1, my hubby decided to leave his current job on June 10th. Due to some side hustle income, a nice savings account, and my income (at least for awhile), we prepared for the hiatus from the daily grind.

A benefit of arduous saving and planning is the opportunity for the long break from paid work!

Our plan was this:

  1. Sell our current home.
  2. Stop by mom and dad’s for a visit on the way out.
  3. Take a leisurely drive along with some sight seeing to our new location.
  4. Move into our new home about the middle of July.
  5. Spend the next month and a half with me getting back to work, getting settled in our new home, and my hubby preparing for his new job.

WHAT REALLY HAPPENED? Read More

Real Estate Mistakes I Made And How To Avoid Them

by in Personal Finance on Jun 23rd, 2011

The following is a guest post from MD of Studenomics. Today he’s releasing a new eBook for 20-somethings that are trying to decide if they should buy or rent a home right now. This quick read will help you save thousands of dollars by making the right choice when it comes to this very important decision.

I find these days that most people on the internet aren’t modest at all with their accomplishments. Everyone is quick to brag about something. I don’t get that. Today I wanted to share some of my mistakes with you guys in hopes that you can learn from them. I wanted to share real estate investing mistakes that I made. These are mistakes that I don’t want anyone else out there to repeat. Read More

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