Real Estate Information Archive

Most school children would probably say that Thanksgiving dates back to the Pilgrims at Plymouth as early as 1621. By the late 1660’s, it had become traditional to hold a harvest festival in New England.

President George Washington declared the first nation-wide thanksgiving in 1789 “as a day of public thanksgiving and prayer to be observed by acknowledging with grateful hearts the many and signal favours of Almighty God.”

One hundred fifty years ago during the Civil War, in October, 1863, President Abraham Lincoln proclaimed the first national day of Thanksgiving.

William Seward, Lincoln’s secretary of state, drafted the proclamation: “No human counsel hath devised not hath any mortal hand worked out these great things. They are the gracious gifts of the Most High God…they should be solemnly, reverently and gratefully acknowledged as with one heart and one voice by the whole American People.”

Even though the country was in the middle of the costly Civil War, the people of America started an enduring tradition to give thanks. In 1941, Congress determined that Thanksgiving will be celebrated on the fourth Thursday in November.

Most people are familiar with the various reasons a homeowner refinances their home which generally result in two major benefits: saving interest and building equity. 

There is however another reason to refinance which may not be as common which is to remove a person from the loan. In the case of a divorce, when one party wants to keep the home and the other party wants their equity out of the home, it is possible for the remaining party to refinance the home. If the equity is sufficient to justify it and the remaining owner can qualify for the new loan, the refinance can provide the proceeds to buy out the other spouse.

Refinancing to remove a person from the loan could also involve a situation where two or more heirs jointly own a property and have differing opinions on when to sell. The same situation could apply to a rental property with multiple owners and the refinance would provide a way to buy out a partner.

Sometimes, it’s not about taking cash out of the home to buy out the other party. If a person’s name is on the mortgage, they’re responsible if it goes to default. One party may be willing to deed the home to the other party but it doesn’t necessarily relieve them of the liability of the mortgage they originated.

Many times, once a person has made their mind to move on, they’ll take the fastest and easiest way out. Removing a person from the deed or a mortgage is a reason to consider obtaining legal advice to protect your interests. Refinance Analysis calculator.

Reasons to Refinance

1. Lower the rate
2. Shorten the term
3. Take cash out of the equity
4. Combine loans
5. Remove a person from a loan

As a homeowner, you obviously pay for your mortgage but as an investor, your tenant does.  Equity build-up is a significant benefit of mortgaged rental property.  As the investor, collects rent and pays expenses, the principal amount of the loan is reduced which increases the equity in the property.  Over time, the tenant pays for the property to the benefit of the investor.

Equity build-up occurs with normal amortization as the loan is paid down.  It can be accelerated by making additional contributions to the principal each month along with the normal payment.  Some investors consider this a good use of the cash flows because interest rates on savings accounts and certificates of deposits are much lower than their mortgage rate.

In the example below, is a hypothetical rental with a purchase price of $125,000 with 80% loan-to-value mortgage at 4.5% for 30 years compared to a 3.5% for 15 years.  The acquisition costs were estimated at $3,000, the monthly rent is estimated at $1,250 and $4,800 for operating expenses. 

Notice that both properties have a positive cash flow before tax.  The cash on cash return is the revenue less expenses including debt service divided by the initial investment to acquire the property.  The 15 year mortgage will obviously have a smaller cash flow and lower cash on cash but the equity build-up is significantly higher.

If the goal of the investor is to pay off the property to provide the highest possible cash flow at a later date, a shorter term mortgage with a lower interest rate will help them achieve that.  A simple definition of an investment is to put away today so you’ll have more tomorrow.  Sacrificing cash flow now, during an investor’s earning years, is a reasonable expectation to provide more cash flow in the future when it might be needed more.

Contact me if you’d like to explore rental property opportunities.  Mike@MikeParker.com or 859-647-0700.

When you pay your landlord every month do you ever feel like you could be living in a place of your own for less then your rent payment?  You could be right.  Check out these fantastic homes today:

4385 Kidwell Ln., Taylor Mill, KY
$150,000

* FHA 3.5% Down, 4.125% Rate, 5.732% APR, P&I-$713.81, MIP-$875.41, RE Tax-$162.25, Insurance-$56.25, TOTAL - $1093.91
* 3 Bedrooms, 2.5 Bathrooms
* Bella Laminate & Ceramic Tile Thru-Out
* Open Great Room, Kitchen & Breakfast Area with Cathedral Ceilings
* Kithen features Stainless Appliances, Island, Counterbar & Walkout to Deck
* Finished Lower Level Family Room with Walkout to Patio, Half Bath and Laundry
* Cul-de-sac, Extrememly Convenient Location
* Immediate Possession
* Fowler Ridge Subdivision
* Boone County Schools

6836 Highridge Ave., Florence, KY
$109,900

* FHA 3.5% Down, 4.25% Rate, 5.763% APR, P&I-$530.85, MIP-$118.39, RE Tax-$104.17, Insurance- $41.67, TOTAL - $795.08
* 2-3 Bedroom, 2 Full Baths
* 1 Car Garage
* Big Backyard
* Finished Lower Level wih Walkout & Full Bath
* All Appliances in Kitchen Stay
* Security System, Newer Roof, Updates Thru-Out
* Possible Quick Possession
* Boone County Schools
* Located in the Heart of Florence, Easy Access to Everything

** This scenario is an estimate, and actual interest rate will depend on the specific characteristics of the loan transaction and credit profile up until the time of closing. The displayed APRs include total points and additional prepaid finance charges but do not include other closing costs. For an Adjustable Rate Mortgage (ARM), the Monthly Principal and Interest payment is based on the initial interest rate, which is subject to change after consummation, which may result in a different monthly payment amount. Rates available as of date of printing and subject to change without notice. ** Total Est. Initial Payment (PITI) includes principal and interest as well as tax, insurance, homeowner dues. Mortgage insurance has been included in the initial payment for loans with less than a 20% down payment or if the loan is FHA. For FHA loans, the Upfront Mortgage Insurance Premium amount has been included in the loan amount. HUFF Realty is an affiliate of HomeServices Lending. Please speak to your real estate agent for more information on this affiliation. All first mortgage products are provided by HomeServices Lending, LLC. HomeServices Lending, LLC may not be available in your area. Wells Fargo Home Mortgage is a division of Wells Fargo Bank, N.A. Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act. Georgia Residential Mortgage License Number: 32253. Kansas Licensed Mortgage Company, License Number: SL.0026321. 333 South 7th St. 27th Floor Minneapolis, MN 55402.

©2013 HomeServices Lending, LLC. All Rights Reserved. NMLSR ID 490683
Contact Colleen Parsons - Home Services Lending
Colleen.r.parsons@hslcincinnti.com - 513-647-5582

For more information feel free to contact Mike Parker/HUFF Realty.  Mike@MikeParker.com.  859-647-0700

The division of assets between the spouses is an important decision to finalize a divorce.  The exercise looks relatively simple: assign a value for each of the assets and divide them based on a mutual agreement between the parties.

The challenge is to make a fair division which requires an analysis to determine their value after they’re converted to cash.

Assume the two major assets in the example, a retirement account and the equity in the home, are equal at $100,000.  It might seem logical to give the home to one spouse and the retirement account to the other.  However, if the person receiving the home decides to sell the home, the net proceeds could be considerably less than the spouse receiving the retirement account.

Let’s pretend that the spouse with the home negotiates a lower price of $475,000 due to current market conditions.  The former couple had owned the home for many years and refinanced several times, pulling money out of the home each time.  When the remaining spouse sells the home, there could be a considerable gain that was never recognized.

As a single person, he or she is now only entitled to $250,000 exclusion and would have to pay tax on the excess gain.  After paying the sales costs, outstanding mortgage balance and the taxes due on the gain, the remaining spouse would have net proceeds of $24,375 compared to the $100,000 that the former spouse received in the settlement.

The message in an example like this is to examine and consider the potential expenses that may be involved with converting the assets to cash after the divorce. Obviously, expert tax advice is valuable in making such decisions

Are you tired of paying your landlords second house payment?  Why rent when you can buy a home of your own.  Check out these Boone County Area Condos.

1814 Mimosa Trail, Florence, KY
$94,900

* FHA 30 Yr with 3.5% Down, 4.125% Rate 5.79% APR, P&I - $458.39, MI- $102.23, Tax - $88.08, Insurance - $35.83, TOTAL - $684.53
* 2 BR, 2 Full Baths
* Private Entry
* Community Pool, Workout Room, Lake, Walking Trails, Play Area
* Convenient Location, Erpenbeck Elementary, Plantation Pointe in Tara
* HOA Fee is $2221.00/Year

2292 Medlock Ln #206, Burlington, KY
$79,900

26 Rio Grande Circle #8, Florence, KY
$77,500

* FHA 30 Yr 3.5% Down, 4.255% Rate, 5.784% APR, P&I - $374.35, MI-$83.49, Tax - $72.00, Ins-$29.17, TOTAL- 559.01
* 2 BR, 2 Full Baths, 2nd Floor Condo
* Overlooks Lake
* Galley Kitchen w/Ceramic Tile Floors, Pantry & Counterbar
* Community Pool, Tennis Courts & Clubhouse
* Village at Southfork, Erpenbeck Elementary, Cooper High School, Super Convenient to Everything
* HOA Fee is $2124.00/Year

7369 Ridge Edge Ct. #D, Florence, KY
$125,000

* Conventional Loan 30 Yr 5% Down - 4.625% Rate, 5.192% APR, P&I-$610.55, MI-$66.30, Tax -$116.00, Ins - $46.92, TOTAL - $839.77
* 2 BR, 2 Full 2 Half Baths
* Finished Lower Level with Walkout
* 1 Car Garage
* Eat-In Kitchen, Formal Dining Room, Living Rm With Walkout to Lg Deck
* WBFP in Fmaily Room
* Mint Condition
* Summits in Oakbrook, Stephens Elementary, Close to Everything
* HOA Fee is $3078.00/Year

** This scenario is an estimate, and actual interest rate will depend on the specific characteristics of the loan transaction and credit profile up until the time of closing. The displayed APRs include total points and additional prepaid finance charges but do not include other closing costs. For an Adjustable Rate Mortgage (ARM), the Monthly Principal and Interest payment is based on the initial interest rate, which is subject to change after consummation, which may result in a different monthly payment amount. Rates available as of date of printing and subject to change without notice. ** Total Est. Initial Payment (PITI) includes principal and interest as well as tax, insurance, homeowner dues. Mortgage insurance has been included in the initial payment for loans with less than a 20% down payment or if the loan is FHA. For FHA loans, the Upfront Mortgage Insurance Premium amount has been included in the loan amount. HUFF Realty is an affiliate of HomeServices Lending. Please speak to your real estate agent for more information on this affiliation. All first mortgage products are provided by HomeServices Lending, LLC. HomeServices Lending, LLC may not be available in your area. Wells Fargo Home Mortgage is a division of Wells Fargo Bank, N.A. Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act. Georgia Residential Mortgage License Number: 32253. Kansas Licensed Mortgage Company, License Number: SL.0026321. 333 South 7th St. 27th Floor Minneapolis, MN 55402.

©2013 HomeServices Lending, LLC. All Rights Reserved. NMLSR ID 490683
Contact Colleen Parsons - Home Services Lending
Colleen.r.parsons@hslcincinnti.com - 513-647-5582

For more information feel free to contact Mike Parker/HUFF Realty.  Mike@MikeParker.com.  859-647-0700