Tag Archives: home loan

Home Loan Budgeting Sets Parameters for Sapphire House Hunters

When you first go shopping for a Sapphire home, loan budgeting—figuring out how much a comfortable monthly mortgage payment would be—pretty much dictates the price range you will be considering. Some listings do the lion’s share of the home loan budgeting work for you through a ‘payment options’ box that provides a thumbnail mortgage payment calculation. You enter a percentage for the down payment, amount, and the type of loan—and at the speed of light it calculates an estimate for the monthly payment. Those that also include the latest property tax bill and an insurance estimate come up with a pretty definite picture of how affordable a given property will be.

An associated cost that home loan budgeting alone doesn’t address is the additional operating cost every homeowner runs into—the maintenance figure. Since those costs are dependent on the type and condition of the property, most experts just advise future homeowners to anticipate 1% of the purchase price per year…a transparently made up number. There are a couple of approaches that can improve on it.

The first way is to invest in a home warranty, which has a set cost. Home warranties are the forms of insurance that cover the repair or replacement of covered items. This can be a relatively economical way new Sapphire homeowners can buy some budgetary peace of mind while familiarizing themselves with the ins and outs of their new Sapphire home. But it’s also an occasion where it’s particularly important to read the fine print—the only way to be clear on what is covered, what is not, and what the deductibles are. It’s also important to get an idea of who the subcontractors will be.

The other way to get a bead on likely future maintenance outlays is to anticipate likely major replacement costs. Wood shake roofs, for instance, should last about 30 years, while fiber cement shingles last five years less (and rough weather conditions can lop years off those life expectancies). Wood floors last a century, as can marble and slate—while carpet usually needs to be replaced every eight to 10 years.

When it comes to included appliances, most Sapphire homeowners will agree that today’s models just don’t seem to last as long as they used to. It may be because electronics have added improved functionality…or it may be a result of flimsier manufacturing. At any rate, the National Association of Homebuilders’ research tells us that dryers (both gas and electric) have average life expectancies of 13 years—as do cooktops, electric ranges, and fridges. Washing machines last an average of 10 years; while microwave ovens last 9 years—as do dishwashers and compact refrigerators. Freezers last 11 years, garbage disposals, 12…but (uh-oh!) trash compactors average only 6. If the previous owner can furnish original warranties or purchase slips, it should be able to come up with a ballpark idea of when to expect replacement outlays.

Home loan budgeting will deliver the all-important mortgage payment amount, but it’s prudent to leave ample some budget for the other inevitable expenses. But first things first—and calling me is a good way to start. Finding a Sapphire home to fit all your requirements (including the budgetary ones) is, after all, job One!

Freddie and Fannie—and Sapphire Home Loans

9-4-freddiefannieWe all remember Freddie Mac and Fannie Mae, the twin quasi-public organizations who backstopped the home loan industry for the whole country. Freddie and Fannie were thought by some to be on the verge of extinction during the home loan crisis, but they revived when Washington stepped in. Freddie’s latest quarterly financials show assets that have a small ‘t’ in front of the number (that’s short for ‘trillions’), so it looks like they aren’t about to go out of business. In fact, whenever one of today’s Sapphire home loans is originated, Freddie or Fannie are probably in the wings. They remain the big guns in the U.S. secondary home loan market, which is so huge its repercussions are felt globally.

Of course, it’s more complicated than that, but so that we don’t have to tread any further through the red tape, let’s just sum up by acknowledging that when Freddie or Fannie sneeze, the entire planet is apt to grab for a Kleenex. Since August saw a good share of planetary financial upset, optimism from Freddie and Fannie would be a relief—particularly for future Sapphire home loan applicants, who might be a bit rattled by the recent swan dive on Wall Street. ‘What does it mean for the availability of mortgage loans?’ they might well be wondering…

Last week it was a good sign when the stock market emerged from the air-raid shelter where it had spent the previous weekend. By Friday, the S&P 500 had made back “modest gains” (T. Rowe Price) after enduring the highest volatility in four years. But the housing markets looked a good deal more stable, if we were to believe Freddie.

The hard facts can be elusive, so Freddie Mac puts together something called the “Multi-Indicator Market Index,” which measures the stability of the U.S. housing market. Mid-week, it released the latest reading, which prompted the National Mortgage News headline “Housing Markets Improve Nationwide: Freddie Mac.” The Index came in at 80.3, an improvement of 1.33% compared with a month earlier. In case that doesn’t sound like a gigantic change, Freddie’s Deputy Chief Economist, Len Kiefer, was there to clarify. “Housing markets are the strongest they’ve been in years,” he told the press.

Freddie reads various home loan industry reports, as well, and passes them on to its web site visitors. Headlines there were equally comforting—

“S&P Case-Shiller: Home prices continue to rise in June” (HousingWire, August 25)
“Housing market gains steam as July new home sales rebound” (Marketwatch, August 25)
“Why the economy is OK, even if stocks aren’t” (CNN Money, August 24)
So for the moment, it does look as if Sapphire home buyers and sellers needn’t be distracted by the news from Wall Street—good or bad. Especially since U.S. 30-year fixed mortgage interest rates were down again for the week…many below 4%! If you’ve been thinking it might be a good time to investigate today’s Sapphire real estate market, I couldn’t agree more: time to give me a call!