The other day I started wondering how you could shorten the term of a mortgage without spending extra money to do so. After all, 30 years is a long time to be beholden to the bank, but most of us need to keep every extra dollar we earn with the higher cost of living and inherent uncertainty in today's economy.
So I let the math nerd that is my heart of hearts shine through and did a few calculations just to satisfy my curiosity. What I came up with was a way to reduce a 30-year fixed mortgage to a 23-year mortgage without changing your normal payment schedule or adding in extra mortgage payments out of your pocket periodically during each year. The solution was amazingly simple... Let the government do it!
That's right, Uncle Sam effectively subsidizes every homeowner's mortgage through the beauty of tax writeoffs. Problem is, most of us take that big tax deduction and pay off the credit cards we had no business running up over the course of the year, or even more likely, during the previous holiday season. Others of us use it for a car downpayment, or some other unnecessary expenditure that we'd do without if that lump sum of cash wasn't coming to us every April.
So here's all you do... instead of wasting that tax deduction, send it to your mortgage company as a payment toward the principle of the home! If you can do that for 23 years, your home will be paid off.
My calculations were based on a 30-year 6% fixed mortgage, with annual property taxes approximately 1% of the value of the home and increasing by 10% every 3 years (the Maryland phase-in assessment frequency). I also factored in a PMI payment of .05% of the original loan amount per month. Since real estate taxes, interest and PMI are all tax deductible, I assumed a deduction of these items at a tax rate of 30%, then adjusted the principal balance each year by subtracting that deduction. By the time I got up to 22 years and 11 months, no more payments were due.
Not only that, but since the final 7 years worth of principle and interest payments would never need to be paid out (for a total of 85 months), and that amounts to 51% of the original loan amount you won't be paying out for years 24-30 of that mortgage. On a $200,000 home, that is $102,000 you won't pay out. Another nice side effect is that your PMI is paid off after only 6 years instead of 11 years, even if your home didn't appreciate one dime in that time frame.
I won't bore you with the annual calculations, but if you too are a math nerd, email me and I will send you that information also. In these uncertain economic times, particularly with the stock market being a roller coaster headed mostly down, you can count on your house as a sound investment until the market recovers. Remember, if you have a 6% mortgage, every dollar you put towards the principle is like making an investment in a stock, bond, or commodity that's growing at 6% annually guaranteed! The strategy I outline above is a way to do just that.
Courtesy of Troy Williams
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 Just in time for the holidays, this breathtaking renovation blends old-world charm & modern styling. Beautiful living room w/ inlaid hardwoods, decorative columns & brick fireplace. Marvelous kitchen w/ tile floors, 42" cabinets, breakfast bar & pantry. Incredible master suite w/ vaulted ceilings & whirlpool bath. Finished lower-level w/ spare room & ample storage. This is the one you waited for! Get more details about this property at http://www.410homes.com/3500devonshire/
Courtesy of Troy Williams
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 Well if I knew exactly where the bottom of the housing market correction would be, I'd probably be a rich and well-sought-after individual, because there are so many variables that will play into that. One of those variables that I think is worth considering is a home's nearby rental market. See, when home prices go down as a result of lagging buyer demand, rental prices tend to go up because of high occupancy. In fact, rentals prices dictate a bottom for home prices. All you do is look at the average rent, for say, a 2-bedroom apartment and let's say it's $1200/mo. Well at today's interest rates that's about a $175,000 home, which is typically enough to buy a small townhome or a condo. Similarly, a renter paying $1600/mo for a 3-bedroom townhome would equate that with a $240,000 home purchase. If the value of that townhome ever dropped to say, $200,000, then the proportionate mortgage would be about $1400/mo, and a flood of renters would realize that it would be cheaper to buy than to rent, thereby increasing housing demand and re-inflating the price of homes. In this way, rentals create an artificial floor for the housing market, as long as interest rates don't go crazy.
Courtesy of Troy Williams
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With the subprime mortgage meltdown in full swing, there are lots of cheap homes out there for the savvy buyer. The problem is that many of these homes have been neglected by their former owners and need work to make them desirable.
So what do you do if you come across a great deal on a house that needs $50,000 for a new kitchen, new floors, new siding, and a finished lower level, but you don't have that type of cash sitting around in the bank?
You get a FHA 203K loan! This loan allows you to incrementally finance the cost of the purchase of the home as well as the repair costs necessary to bring the home up to the standards you expect. Once the renovation is complete, the total spent on the home and the repairs is recast as a single mortgage with a fixed rate just like a normal purchase. If the repairs are under $35,000, the process only takes about 2 weeks longer than a normal FHA loan.
If you want more information about whether an FHA 203K might be the right solution for your home buying needs, contact me for more information.
Courtesy of Troy Williams
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INGREDIENTS
◊ 12 jumbo shrimp, peeled and deveined
◊ 1/2 cup plus 2 tablespoons Piri Piri, divided
◊ 2 tablespoons olive oil
◊ 1/2 teaspoon salt
◊ 1 lime, quartered
◊ 12 Bibb lettuce leaves
◊ 8 red bird's-eye chilies, seeds and ribs removed, chopped
◊ 1/2 cup fresh lemon juice
◊ 1 tablespoon cilantro
◊ 1 tablespoon chopped parsley
◊ 2 garlic cloves
◊ 1/2 cup olive oil
DIRECTIONS
To make the piri piri: Combine the chilies, lemon juice, cilantro, parsley, and garlic in a blender and puree until smooth. With the blender running add the oil in a slow, steady stream and bland until well combined. Store in an airtight container and refrigerate for up to 2 weeks.
To make the shrimp: Toss the shrimp with ˝ cup of the piri piri in a large bowl. Refrigerate for 20 minutes. Heat the olive oil in a large sauté pan over medium heat. Add the shrimp and cook for 2 minutes on each side, or until opaque throughout. Transfer to a plate and sprinkle with the salt. Squeeze the lime quarters over the shrimp.
Spread ˝ teaspoon of the remaining piri piri sauce on each lettuce leaf. Place a shrimp on each leaf and fold over bottom and sides to form a wrap. Serve immediately.
Courtesy of http://abcnews.go.com/Nightline/Story?id=4626490&page=1
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Despite the chill that is upon us, Spring is truly around the corner (March 20, 2009). So why not try something different for your garden this year like an edible landscape?
First off, before you start planting anything you must plan. Create a paper map of your yard with indications of where the sun is strongest during the day. This will help you determine what types of plants are good for what areas. In addition, by creating a map, this may help you decide what current plants should remain or be removed.
Energy bills aren't going down anytime soon but you can buffer those expenses by planting trees. Nut and fruit trees of varying sizes are available from a myriad of sellers. But if you have no room for shade trees, foundation plants can suffice. Certain kinds of berry plants and herbs, over time, can not only produce edible treats but provide energy buffer zones around your home.
But if your lifestyle includes a condo or an apartment, edible gardening works for you as well. Heavy-duty containers on patios and balconies can also provide shade, in some cases, as well as fruit, vegetables and herbs all season long.
For more information regarding Edible Landscape, check out the National Gardening Association's website.
Courtesy of Meredith Williams
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