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Waiting to Buy? It May Cost You

Sunday, April 30, 2017
by Don DeHanas, Broker

“More has been lost due to indecision than was ever lost to making the wrong decision.” Interest rates have as much effect on housing costs as price and when they are both trending upward,

it can be very expensive to wait. There can be some legitimate reasons for postponing a purchase such as needing to save the down payment, improve your credit or waiting to find out about a possible transfer. The problem is that prices and interest rates could, and very likely will, go up in the future.

If the price of $250,000 home went up 5% and the interest rate went from 4.5% to 5.25%, the payments would increase by $176.42. The additional cost over a seven-year period would be close to $15,000. The questions that indecisive buyers need to ask themselves is “how am I going to feel knowing that if I had not waited, I could have been living in the home for less money?” and “What would I have spent the money on if I didn’t have to make the larger payment?”

Use the Cost of Waiting to Buy calculator to find out how much indecision may be costing you. For a FREE, no hassel consutation with a prefessional, please call 301-870-1717 today.

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Should I buy a Home?

Monday, April 24, 2017
by Don DeHanas, Broker

Some would-be buyers have emotional reasons to own a home like having a place of their own where they can raise a family, feel safe and secure and enjoy their friends’ company. Other buyers’ dominant reasons might be financial in nature such as building equity or lowering their cost of housing.

Regardless of what might be motivating people to want their own home, it is easy to justify that now is a good time to purchase.

Let’s look at a $250,000 example using a FHA loan. The total payment will be about $1,835 dollars a month. If the payment is lower than the rent a person is paying, that should encourage a person to continue investigating. In this example, when you consider the monthly principal reduction, the monthly appreciation and the tax savings, even with money added for monthly maintenance, the net cost of housing is less than half the total house payment. Considering all those advantages, the would-be buyer is spending over $1,100 per month more to rent than it would be to own. In a year’s time, they would lose close to $14,000 which is more than the down payment of $8,750 required on this price home.

Most would-be buyers understand that a home is a big investment but they may not understand the advantage of the leverage caused by the low down payment mortgage. The benefits extend beyond a return on the down payment but to the value of the home. In this example, the $8,750 down payment grows to an equity of $73,546 in seven years based on 2% annual appreciation and normal amortization on a 30-year loan. If you calculated that as a rate of return, you’d be challenged to find anything that could compare with it.

Thinking of buying a home now?  Call one of our buyer specialists at 301-870-1717 for a free, no hassle consultation.

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Lower the Rate, Deduct the Interest

Sunday, April 9, 2017
by Don DeHanas, Broker

Credit card debt in America is back to levels prior to the recession. The average credit card APR is just under 16% according to CreditCards.com Weekly Credit Card Report.

Homeowners have an advantage over renters when it comes to getting their arms around debt issues. Basic money management suggests that higher rate debt be replaced with lower rate debt. Credit cards, personal cars, boats, motor vehicles and other personal property, typically have interest rates higher than that of real estate loans.

Borrowing against a person’s home usually provides the lowest rate of financing. Refinancing a home mortgage to take cash out to retire personal debt is one option. Another would be to secure a home equity or HELOC, home equity line of credit.

An alternative advantage of borrowing against one’s home is that the interest may be tax deductible unlike the interest on most personal debt. Qualified mortgage interest includes acquisition debt which can only be used to buy, build or improve a principal residence and up to $100,000 of home equity debt which can be used for any purpose.

Managing money is a critical life skill that people need to master. While the goal may be to become debt-free, paying the least amount of interest possible can be a good first step. Owning a home provides an asset that allows for options not available to tenants. Seek professional advice to determine your best course of action.

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Rentals: The Ideal Investment

Monday, April 3, 2017
by Don DeHanas, Broker

Rental homes are the IDEAL investment because they offer a higher rate of return than other investments without the volatility of the stock market. With certificates of deposit and bonds at less than 2%, people need an alternative investment that they understand and with a reasonable amount of control.

In this case, IDEAL is an acronym identifying the advantages of rental properties.

• Income from the monthly rent contributes to paying the expenses and a return on the investment.

• Depreciation is a non-cash deduction that shelters income for some investors.

• Equity buildup occurs with amortized mortgages because each payment is composed of interest owed and principal reduction to retire the loan by the end of the term.

• Appreciation is achieved as the value of the property goes up.

• Leverage can increase the return on investment by using borrowed funds to control a larger asset.

These individual benefits working together make rental real estate a good investment for today’s economy. Increased rents, high rental demand, good values and low, non-owner occupied mortgage rates contribute to positive cash flows and very favorable rates of return. To find out more about how rentals might complement your current investment plans, contact your real estate professional.

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The DeHanas Team
DeHanas Real Estate Services
601 Post Office Road, Suite 2D
Waldorf MD 20602
Office: 301-870-1717
1-800-842-0190
Fax: 240-754-7867
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Servicing all Anne Arundel County, Calvert County, Charles County, and Prince George's County as well as Annapolis, Bowie, Chesapeake Beach, Crofton, Dunkirk, Edgewater, Ft. Meade, Huntingtown, La Plata, North Beach, Odenton, Owings, Pasadena, Severn, Waldorf, and the Upper Marlboro areas of Maryland, all of Washington DC, and Northern Virginia, including Alexandria, Arlington, and King George County real estate advertised in this website are subject to the Federal Fair Housing Act of 1968 which makes it illegal to advertise any preference, limitation, or discrimination based on race, color, religion, sex, handicap and familial status, or national origin, or any intention to make any such preference, limitation or discrimination. DeHanas Real Estate Services will not knowingly accept any listing agreement for real estate sales in Anne Arundel County, Calvert County, Charles County, and Prince George's County as well as Annapolis, Bowie, Chesapeake Beach, Crofton, Dunkirk, Edgewater MD, Ft. Meade, Huntingtown, La Plata, North Beach, Odenton, Owings, Pasadena, Severn, Waldorf, and the Upper Marlboro, all of Washington DC, and Northern Virginia, including Alexandria, Arlington, and King George County areas which are in violation of the law. Our clients and customers are informed that all dwellings advertised on our website in Anne Arundel County, Calvert County, Charles County, and Prince George's County as well as Annapolis, Bowie, Chesapeake Beach, Crofton, Dunkirk, Edgewater MD, Ft. Meade, Huntingtown, La Plata, North Beach, Odenton, Owings, Pasadena, Severn, Waldorf, and the Upper Marlboro, all of Washington DC, and Northern Virginia, including Alexandria, Arlington, and King George County areas are available on an equal opportunity basis. All prices and finance claims appearing in this site are subject to change without notice.