August 12, 2008

Texas home builders

I am totally exhausted today because I just got back from my mission trip to Ghana. My church group and some Texas home builders went over there to help build homes for people who can't afford anything at all. We met all of the families through the church because they are part of another branch over there. It was an amazing experience but the flights have totally drained me of all of my energy.
The trip lasted about three weeks and it is something that will stick with me for the rest of my life. I don't know what my favorite part of the trip was in terms of things I can point to on a map or in a book, because what struck me the most were the people. Every one of these families was living in such a state that anyone in this country would have been shocked to live that way for a day. With conditions of labor and resources as bad as they are for these families, our work really seemed to be a huge burst of energy and life for these people. We built five homes and with each home we set up a rain catching system with a solar water purifier. Each home is totally run on solar energy and so these families have gone from the worst off to having some of the most advanced homes in the country in three weeks. After each significant step in the building process the reactions from the families was just beautiful because I could understand how they would feel overwhelmed by our generosity and their new homes.
The actual work was much harder than I though it was going to be. I like to think of myself as a pretty sporty girl but this was just straight up back breaking labor. I don't think that I was really ready to take that much sun and a few times I did get a little bit too dehydrated while on the job. The builders were really great though because they knew exactly what they were going to do before we ever got there and so we just took orders and tried our best. It was a really beautiful experience and I hope that everyone can try something like that at some point.

Posted by juliusp at 12:37 PM | Comments (0)

April 08, 2008

Need Money Going to take from my home

Everyone has a general idea about mortgages and how they assist you in buying a home. One of the newest mortgage products being promoted by banks and finance companies, however, is geared to the older generation who already own their homes. This product is known as the reverse mortgage.

After my parents retired, they found it difficult to make ends meet on a combination of social security and a small pension my Dad had from his many years of employment. Inflation keeps raising prices and, although Social Security does provide inflation adjustments on an annual basis, they never really cover the increase in expenditures. Right now, just the price of oil is enough to knock any budget off kilter. Add to that all of the other prices which are raised in reaction to the oil price increases, and it becomes almost impossible to maintain your standard of living.

Mom and Dad clipped coupons, went to sales whenever possible, shopped during the specific days that Senior Citizens discounts were available, and used all types of creative ways to hold down expenses. They shopped for car and homeowner’s insurance, made certain their investments were getting the highest interest rates available, and even double checked on the fees charged by their bank in the hopes of saving some money. All of these efforts on their part did bring down their expenses somewhat, but never enough to allow them to relax about their finances. Vacations were out of the question and even small luxuries were to be avoided on their budget.

Dad was reading the newspaper one day when he saw an article about reverse mortgages. He was really excited, told Mom about it, and they then called me for my opinion. I, too, had read a few articles on the subject but had not investigated how these mortgages actually were handled and I had no idea of the costs involved. I then agreed to research this subject on behalf of my parents and report back to them on my findings. They were so excited that this might work for them that they called me two days later to see if I had gotten any information yet. I had to advise them that I had not started my inquiries but would plan on looking into everything the beginning of next week when I anticipated having some additional time.

I began my research by reading the article Dad had discovered in the newspaper. The newspaper referred me to a website which was particularly informative as to how these mortgages work. The homeowners complete an application after determining the amount they want to borrow to cover their needs. This amount can be paid to them in a lump sum or as a monthly income. Of course the sum cannot exceed a certain percentage of the value of their property. Also, any existing mortgage would have to paid off prior to income dispersal so that the bank providing the reverse mortgage will become the first lien holder on the property. One problem with this type of financing is that the upfront costs are extremely high. Another drawback is that you are spending your children’s inheritance. Of course, since you earned the money it is certainly your right to spend it and your children would most likely agree. I know I would rather see my parents enjoying themselves at this stage of their lives than constantly worrying about saving money and trying to make ends meet. Although they were not very wealthy throughout the years, they were able to afford special treats from time to time. A vacation, a new car and an occasional luxury item was attainable for them. Since retirement, this has not been possible and I would really enjoy seeing them relaxing and enjoying their retirement. They have worked hard all of their lives and certainly should be reaping the benefits of all of those years.

The reverse mortgage is designed to allow people to stay in their homes as they age. The money does not have to be repaid until my parents leave their home or die. Upon their death, their beneficiaries who inherit the home will assume the obligation to pay back the money advanced to my parents. I will, at that point, probably sell their home and reimburse the lender in accordance with the agreement signed by my parents.

A reverse mortgage is only recommended for people who plan to stay in their home for the rest of their lives. My parents definitely plan to stay in the family home and we, as a family, have thoroughly discussed the benefits and drawbacks of a reverse mortgage. We have come to the conclusion that it would be a good thing for our family and will make Mom and Dad’s lives much happier and enable them to truly enjoy the retirement they have so rightly earned.

Posted by juliusp at 10:53 AM | Comments (0)

March 26, 2008

Poor Students need money

As a student, I have always needed to supplement the small income my family provides me. They are extremely generous in paying for my education and I know that it is a financial strain on their budget. Since I wanted to have my own car and a somewhat active social life, it has always been necessary for me to hold a part-time position. Currently I have been working at a local sporting goods store. It is a good job but, unfortunately, the salary is minimum wage. It is tough to survive on this income so I thought it was time to move on to something a little more challenging and with greater earning potential.

I had recently visited with my Uncle Ben who is a local real estate broker. We were discussing my finances and he suggested a possible solution. If I was willing to attend classes at a local community college or real estate office, study hard and pass the licensing exam, I could work for him part time in his office. No decision was made as to the position I would have, but he assured me that we would work on it and determine where I best fit into his office. Since this offer had the potential of greatly increasing my income and providing me with an additional skill, I decided to investigate class schedules and costs so I could find the classes that would best fit into my life and budget.

As summer was rapidly approaching, I decided to sign up for a real estate course being offered at a local broker’s office. This was an intense 4-week course, which would keep me very busy but allow me to continue my current part-time job and meet my expenses.
The class was to begin on July 5th and I was looking forward to learning about real estate and finding a new career.

The classes were excellent and I enjoyed the subject very much. There are many legal regulations agents must follow and communicate to their customers, and this was the major topic at the beginning of the course. The instructor advised us that the law of agency was one of the most important areas of the curriculum and would be reviewed and referred to throughout the course term. I found every section of the course interesting.

Of course, this four-week course was definitely a sacrifice for me as it meant giving up a large portion of my summer vacation. After the course was completed, however, I would still have several weeks to enjoy the relaxed lifestyle I look forward to at this time every year.

Once I had completed the course, I went ahead and scheduled my licensing exam. This was being offered in the middle of August and I felt as though I was well prepared to sit for the real estate licensing exam. I was looking forward to my new career and hoping this would be a positive move in a good direction for me.

I contacted Uncle Ben and explained what I had been doing over the summer. He assured me that he was going to find an opening for me in his office and I should just keep him advised. He needs to know that I have been licensed and what hours I am available to cover the office. I could not believe my good fortune that I had this great job waiting for me and was anxious to get started.

When I contacted Uncle Ben as a licensed realtor available for assignment, he said he had decided to place me in the rental section of his office. He already had a qualified person handling this position and I would receive excellent training from this employee. In the long-term, Uncle Ben was not certain that this would be the right position for me but he determined it was a good starting place with the flexibility I required because of my school schedule.

I have now been working with Uncle Ben for almost a year. The work is definitely more challenging than I had expected, but very rewarding. I enjoy helping people find homes they will love and I’m able to maintain an excellent rapport with my customers. I have an outgoing nature and this is an asset in this profession.

I am looking forward to continuing at Uncle Ben’s for the immediate future. When I graduate from college and have established myself as a real estate agent for the required amount of time, I am contemplating taking the real estate broker’s licensing course so that I might eventually open my own office in Uncle Ben’s footsteps. These are my current career plans and only the future will tell if I am able to fulfill this dream.

Posted by juliusp at 10:51 AM | Comments (0)

March 20, 2008

Are you supposed to be born with this knowledge

There should be a course taught in high school regarding mortgages and home equity loans. The largest purchase in most people’s lives is a home and they have no preparation for this expenditure. Unless someone has studied in the finance or real estate areas, there is no education provided for such an important part of a person’s life.

There are many considerations when shopping for a mortgage and it is very important that you choose your financing wisely, as huge savings in interest may be available if you make the right choices. A very small difference in rate can become a very large difference in the actual amount you pay back on a mortgage. It is true that mortgage brokers can help you and answer some of your questions, but you need to remember that they are going to try to interest you in the arrangement that is most profitable for them.

You must decide how much of a mortgage you can afford on your income and there are calculators available online to assist you. It is often stated that your home should not cost more than two and one half times your annual salary. Once you determine the amount of principal you can afford to carry, you add your down payment to it and you will then know how much you can afford to pay for a home. Remember, you do have to allow for numerous additional expenses such as closing costs, attorney fees, prepayment of taxes and homeowner insurance premiums, appraisal fees, title fees, home inspections and many other miscellaneous charges.

Once you have found the home of your dreams, it is time to seriously begin shopping for a mortgage. Gather information regarding rates and terms available, always taking into consideration any extra fees, etc. which are being added on to the offer. Determine in advance if you are interested in a fixed or a variable rate. Although a variable rate can often be tempting, always consider that it can be a gamble and decide whether or not you want to take the risk. Mortgage loans are often available for a variety of terms, usually 20-years, 25-years and 30-years. Rates sometimes differ based on the terms available but your interest payments over the shorter period loan will be much less than over the longer term. This could help you to more quickly own your home free and clear. Being mortgage-free can be a wonderful feeling and, if this is your goal, you will want to consider the shortest term you can afford.

Comparison of rates, terms and types of mortgages can be made on the internet at sights such as Bankrate.com. Weighing these offers and checking them against what your local banks might have available, you can make an informed decision about the financing of your new home.

In the 1980’s banks found a new way to increase their earnings. They introduced homeowners to their newest product known as the home equity loan. After working hard for many years to build-up equity in their homes, suddenly people were being tempted by having that equity available to them for a variety of other things, some of which could increase their standard of living. Suddenly, they could borrow this money to make home improvements, buy new cars, invest in a second-home. Unfortunately, however, many began borrowing to consolidate their credit card debt. They could consolidate this debt with their mortgage through either refinancing the mortgage or taking out a second mortgage as part of a home equity loan. The saddest part of these transactions is that once the debt has been transferred to the loan, the credit cards are still there to tempt people to continue to spend until they are back in debt. Of course, when that happens, they will most likely not have any additional home equity to use to again consolidate their debt and will have to payoff the debt at the very high interest rates charged on credit cards. They are also exposing themselves to the possibility of late fees and over-the-credit-line fees which increase your debt load and generally make it nearly impossible to ever get back to being debt free. This is a cycle which you never want to begin so it’s very important to be prudent with your expenditures and keep yourself in a solid financial position as, in the long run, this is how you will accumulate wealth and it will enable you to enjoy a more comfortable future.

Posted by juliusp at 10:31 AM | Comments (0)

March 18, 2008

Home Buying- can they make is harder?

If you are considering purchasing a new home, it is time to think about the mortgage options available to you. You can go to your bank and ask about their rates and terms. While inquiring about this, you also need to investigate closing costs. Closing costs include miscellaneous bank fees (watch out they can be very high), appraisal fees, title costs, etc. These can amount to a very large sum of money. Not all banks charge the same rates so it is very important that you do a thorough investigation and determine what costs are being charged by the lender you are considering.

After checking out the rates at your bank, you would want to investigate what other banks are charging. One source of information is Bankrate.com. There are many websites that will provide this information but this one is very popular and seems to give you the information you want with the least hassle. Again, you must consider the closing fees as part of the loan cost.

Options for mortgages include a variety of terms and whether you want a fixed rate or a variable rate. Be careful of variable rates because banks often use them as teasers. They will offer an exceptionally low rate of interest for a short period of time (possibly one to three years). After that time period, the real rate kicks in and is usually prime plus a certain percentage. When the prime rate rises, so does your mortgage payment. This is a gamble and can cost you a great deal of money over the long term. You will be fine as long as the prime rate stays low but, if it should increase considerably, you could find yourself in a position where you are unable to make your mortgage payment. This could eventually lead to foreclosure on your home. This is not a road any of us wants to travel.

Always consider the long term possibilities when investigating a mortgage. A home purchase is generally the largest purchase a person will make in their lifetime. You want to be sure that you are getting the best deal available to you. A difference of 1% can save you possibly $40,000 in interest over a 30-year loan period. This is a great deal of money and shows you the importance of making certain that you get the best loan deal available for your mortgage.

Always remember that the interest rate is not your only consideration. Some banks and finance companies offer lower rates as a lure but charge exceptionally high fees to compensate.

You must weigh all of the charges before making an informed decision as to which offer is best for you. You may want to consider a 20-year loan or a 25-year loan instead of a 30-year loan. The interest savings would be substantial and, if you can afford the higher payments, this could be a great advantage to you over the long-term.


You must also give some consideration to mortgage insurance. The purpose of PMI is to protect the bank’s investment but you must pay the premium, which is usually included in your monthly payment to the bank. Anytime you place a down payment of less than
20%, the bank requires mortgage insurance to protect their interest in the home. Once you can prove that your home equity has increased to more than 20%, you usually can cancel the insurance. Some companies, however, demand that you keep the coverage for three years and, only then, will they consider an appraisal that shows your equity has increased to over 20%. This is another cost involved with a home purchase.

While planning your budget, please remember to include home insurance as part of your monthly payment. This can become quite expensive depending on the type of policy you choose and the value of your home. Insurance, along with taxes, must be included in your budgetary figures so you can accurately estimate the costs involved with your home purchase. Investigate insurance thoroughly as there can be huge differences in rates. There are mutual insurance companies formed so that their policyholders are also their stockholders. These can be quite beneficial and should be included in your investigation.

Posted by juliusp at 10:29 AM | Comments (0)