17
Sep

8 Essentials For Cooling Your Home

8 Essentials For Cooling Your Home

  Tuesday, 30 August 2016 2:50 pm

When the temperatures spike, most families crank up the air conditioning to keep their homes cool. While blasting the AC is often viewed as the first step in cooling a home, there are a number of other ways to keep your home comfortable in the summer.

#1 Open Windows at Night

If you live in a region of the country where nighttime temperatures tend to dip into the lower 70s and upper 60s, open your windows at night and turn off the AC. Once the sun is down, that cool air can flow into your home overnight and help maintain a cooler starting point for the next day. Turning on any fans you have around the house will help circulate that cool air.

#2 Leave Interior Doors Open

During the winter months, it’s a good idea to close doors to unused rooms to avoid wasting money heating those spaces. But closed-off rooms can become heat blankets in the summer if you don’t open them up and allow for even airflow throughout your home. To help keep the house cooler, open your interior doors.

#3 Close Blinds During the Day

It’s nice to open the shades and let in some sunlight, but up to 30 percent of the unwanted heat in your home comes from windows. Shut your shades to limit the house-warming sunlight allowed into your home. Focus on closing only west- and south-facing windows to still give your home the benefit of natural light. This can help lower the mid-day temperature of your home by almost 20 degrees.

#4 Using Appliances at Night

Your oven, washer and dryer are the primary culprits when it comes to unwanted heat in your home. Using your grill to cook is a simple way of keeping unwanted heat outdoors. As for your chores involving laundry, leave those for the nighttime hours when temperatures are naturally lower.

#5 Keep the Furnace Fan On

The vast majority of thermostats give you the power to manually control the fan that blows hot air through your home in the winter. If you turn this fan on during the summer, it can help to distribute the cool air from your basement to the other levels of your home. This provides better airflow in your home and an overall cooler feeling.

#6 Leave the Bathroom Exhaust Fan On

The steam from your shower will create a pocket of hot air in your home that will exit the bathroom the moment you open the door. It’s already a good idea to run the exhaust fan while you’re in the shower, but consider leaving it on for 20 to 30 minutes after your shower to help blow out the hot air.

#7 Consider Upgrades Outdoors

There are two big things you could do to the outside of your home to help keep it cooler in the summer months. First, you could repaint the siding of your home with a lighter color to deflect more of the sun’s rays. The siding on your home is just like any dark surface or dark clothing. The darker it is, the more heat it attracts and retains. The same can be said for your roof. Slate, concrete, clay and various tiles offer better protection from heat than standard shingles.

#8 Install New Windows

Old, single-pane windows are a significant source of heat gain in your home during the summer months. These old, outdated models make it too easy for hot air to creep in and cold air to leak out. Replace your older windows with newer models if you can. Or, install new weather stripping to reduce the temperatures in your home.

Conclusion

These seven house-cooling tips are sure to keep you comfortable and lower your utility bills — all without resorting to the constant use of your AC.

17
Sep

The Benefits of a Mortgage in Low Rate Environment

The Benefits of a Mortgage in Low Rate Environment

It seems every local paper, financial network or informative media source is reporting about historically low interest rates, the fear of zero or negative interest rates and the discussion of stagnated economic growth because of these conditions. What does all of this mean for you as a homeowner?

The current low interest rate environment has heralded an unprecedented opportunity for homeowners to reconsider the much regarded theory that owning their homes free and clear of a mortgage is the harbinger of long-term financial security.

What is a homeowner to do? Owning a home is indeed a quintessential goal of most individuals. We have entered an era with the current low interest rate environment where there may be merit for some homeowners to consider refinancing their homes to take advantage of these low interest rates as part of their long-term financial plan. These decisions should be made on an individual basis after a thorough analysis with a qualified financial professional.

Before you start thinking we have lost our minds and that there is no way you would attempt to refinance or maintain a long-term mortgage, let’s take a look at some of the benefits of holding a mortgage.

Benefits of Historically Low Rates

Many individual investors’ financial goals include home ownership free and clear of mortgage debt. However, I think we can all agree that low mortgage interest rates can benefit homeowners who qualify for these low rates.

No-debt ideology: First, we need to understand why the ideology of paying off a mortgage originated. If we look back in history to the late 1920s and 1930s, we are reminded of an unfortunate time where a large number of families lost their homes. Fear was engrained in Americans because of this and, in turn, the desire to buy and keep a home became a defining way to achieve financial security. As we move forward in time and look at the late 1970s and early 1980s, we see mortgage rates as high as 15-20%, which made homeownership unmanageable for many families. Due to these economic experiences, our parents and grandparents made it a point to encourage their children and grandchildren to pay off a home to ensure long-term financial security.

Reduce monthly payments and cash flow obligations: Many people try to eliminate their mortgage to get rid of the pesky monthly payment thinking they will have an increase in monthly cash flow. But even though the mortgage is paid, money still needs to be set aside on a monthly basis for property taxes and insurance. So, a good portion of a monthly “mortgage payment” still exists.

Mortgage tax deductions: When a home mortgage has been eliminated, the tax deduction for mortgage interest is no longer available come income tax time. The mortgage interest portion of a mortgage payment is tax deductible in most circumstances. This means that a percentage of the mortgage payment you pay each month decreases your taxable income. This is one of the largest upsides to maintaining a mortgage throughout your lifetime. A simple mathematical calculation and analysis with your tax professional can help you determine the cost benefit of having a mortgage interest deduction.

Liquidity and opportunity costs: There is a liquidity and potential investment benefit to having a mortgage. Typically, a home is an individual’s largest asset. Therefore, compared to other types of debt, mortgages hold the lowest, tax-adjusted, interest rate for the largest portion of someone’s net worth. If individuals are disciplined and utilize their cash flow and assets optimally, great benefit can be achieved from having a 30-year mortgage.

To illustrate a hypothetical example, let’s say an individual purchased their first home for $200,000 and made a down payment of 10% (or $40,000) with a 30-year mortgage for the remaining $160,000 at 4% interest. Ten years later, this same individual gets married and decides to move into a bigger home to accommodate an expanding family. At 4% appreciation in the original home’s value, the home would now be worth $300,000 and have approximately $180,000 in equity. If they purchase a larger home for $400,000, with a 20% down payment of $80,000 and put the remaining $100,000 to work in a tax efficient, balanced portfolio, the following could hypothetically result.

The $100,000 from the initial home’s equity could be invested in a tax efficient, balanced portfolio, providing the growing family with liquidity and emergency reserves that would not otherwise be available if the funds were tied up in their home. A home is not a liquid investment and money you have invested in your home earns a 0% rate of return, whereas a tax-efficient, balanced portfolio has a greater opportunity to produce returns greater that 0%. Add in the tax benefit of deducting the interest and things really start to get compelling for the rationale of holding a 30-year mortgage.

Hypothetically, $100,000 in the S&P 500 for 20 years could provide an approximate 10% return on your investment, resulting in $492,60.28 in an outside investment account that is accessible to the family.

Once you have put money down or paid off your home, the only way to get it back is by selling your home. This means the largest portion of your net worth is not accessible and not working for you the way it could potentially be in a tax-efficient investment account. Additionally, the benefits of utilizing the mortgage interest deduction would be reduced or eliminated as well.

As another example, retirees may be desiring more liquidity to provide resources for travel or just plain enjoying their freedom in retirement. If they choose to downsize, as many do, by re-deploying the equity from their home sale and getting a mortgage for their new home, investing that equity in a tax-efficient manner, spinning off dividends and interest for travel and for enjoyment with the goal of preserving the principle for a home at a later date, the retiree has accomplished many objectives. They have freed up some liquid cash for travel, they are investing money for a hypothetical 20 year retirement and utilizing the proceeds from that investment (dividends and bond yield) for extra cash flow. With the goal of having a “capital preservation model allocation,” the equity from their home sale could be potentially preserved to pay off their home down the road should they choose to do so.

Factors to Consider

A lot of factors need to be considered when evaluating strategies for home ownership, especially income and cash flow throughout a lifetime. The ideology of simply buying a home and paying off the mortgage has become an antiquated way of thinking due to the current low interest rate environment.

We think taking time to explore ways to take advantage of historically low interest rates is a good use of time. The changes in your monthly mortgage payment could potentially increase your liquidity, ability to save, provide the ability to invest in a pre-retirement savings or investment account and potentially provide access to liquid assets for other opportunities that are unforeseen at this time.

We suggest you call your current lender as well or get a second opinion from a mortgage broker to see what options may be available to you.

These are the opinions of Cheryl Norman and not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. Securities offered through Registered Representatives of Cambridge Investment Research, Inc., a broker-dealer, member FINRA/SIPC. Advisory services through Cambridge Investment Research Advisors, Inc., a Registered Investment Adviser. Cambridge and Flagship Capital Advisors are not affiliated.

16
Sep

9 Common Real Estate Myths That Plague Buyers and Sellers

9 Common Real Estate Myths That Plague Buyers and Sellers

Even though most people are rarely part of a real estate transaction, everyone believes they are an expert.

Mature realtor showing couple interior of house.

While there’s a prevailing belief that buying without a real estate agent will save you money, the truth is you’re almost always better off working with a pro. (Getty Images)

Buying or selling a house is not something most of us do every day. You may do it once a decade, or even once in a lifetime. Despite the fact that most of us enter the world of real estate only rarely, we all think we know how it works, based on the experiences of friends and family members, stories we have heard and things we have read.

But for everything we believe we know about the industry, there are a number of myths that circulate about how real estate actually works. Buying into those can hurt your chances of buying or selling the right home at the right price.

In recent years, technology has radically changed the way homes are bought and sold, and yet some aspects of real estate are the same as they were when your parents bought their last home. If a long time has passed since your last transaction, you may be surprised at how much has changed.

The Internet has made much more information available to consumers, but not all the information is equal, or even accurate.

“A lot of people, for some reason, they believe what they read on the Internet,” says Gea Elika, principal broker of Elika Real Estate in New York and a regional director of the National Association of Exclusive Buyer Agents. “Read everything you see on the Internet with a grain of salt.”

The danger with believing everything you hear or read is real estate myths can cost you money when it’s time to buy or sell a home. Here are nine of the most common ones that can trip up buyers and sellers:

Set your home price higher than what you expect to get. Listing your home at too high a price may actually net you a lower price. That’s because shoppers and their real estate agents often don’t even look at homes that are priced above market value. It’s true you can always lower the price if the house doesn’t garner any offers in the first few weeks. But that comes with its own set of problems. “Buyers are highly suspicious of houses that have sat on the market for more than three weeks,” says Nela Richardson, chief economist for the brokerage Redfin. In areas such as San Francisco where multiple offers are common, sellers will actually price their homes for less than they expect to get, in the hopes of getting multiple offers above asking price. However, if you do this in a declining market, the danger is that all the offers will come in at the asking price or lower.

You can get a better deal as a buyer if you don’t use a real estate agent. “That’s a completely false premise,” Elika says. If the house is listed with a real estate agent, the total sales commission is built into the price. If the buyers don’t have an agent, the seller’s agent will receive the entire commission.

You can save money selling your home yourself. Some people do successfully sell homes on their own, but they need the skills to get the home listed online, market the home to prospective buyers, negotiate the contract and then deal with any issues that arise during the inspection or loan application phases. It’s not impossible to sell a home on your own, but you’ll find that buyers expect a substantial discount when you do, so what you save on a real estate commission may end up meaning a lower price. It’s not impossible to sell your home on your own for the same price you’d get with an agent, but it’s not easy.

The market will only go up. In recent years, homebuyers and sellers have experienced a time of increasing home values, then a sharp decline during the economic downturn and now another period of increasing values. “They think that the market only goes up,” Elika says. “They don’t think about when a correction will come.” The recent recession should have reminded everyone that real estate prices can indeed fall, and fall a lot. Economist Robert Shiller created an inflation-adjusted index for home prices dating to 1890 and found that home prices have fallen a number of times over the years, including in the early 1990s, the early 1980s and the mid-1970s.

You should renovate your kitchen and bathroom before you sell. If your kitchen and baths work, a major remodel could backfire. Prospective buyers may not share your taste, but they don’t want to redo something that has just been renovated. “You’re better off adjusting your price accordingly,” says Kevin Brown Jr., president of Praedium Real Estate Services in Pittsburgh and a regional director of the NAEBA. “Most buyers want to put their own spin on things.”

You’ll earn back what you spend on renovations. If you fix the heating and air conditioning system or roof, you will sell your house more quickly, but you probably won’t recoup what you spent. According to Remodeling magazine’s 2015 Cost vs. Value Report, the only renovation that is likely to net you as much as you spent is a new front door. You’re likely to recoup only 67.8 percent of what you spent on a major kitchen remodel and 70 percent of what you spent on a bathroom remodel on a mid-range home. “Very few things will bring you great returns,” says Sabrina Booth, an agent with Redfin in Seattle. “If you’re going to do these projects, it’s better to do them for your own enjoyment.”

All the properties listed in the multiple listing service show up online. Your agent must choose to let the listings show up online. Most do, but it never hurts to verify that yours will.

Open houses sell properties. Homes rarely sell to buyers who visited them during an open house. Agents like open houses because it enables them to find additional customers who are looking to buy or sell homes. If you or your agent choose not to have an open house, it probably doesn’t hurt your sale chances – although holding a broker’s open house for other agents may be worthwhile.

The agent who shows you homes or lists your home represents your interests. Maybe and maybe not. In about half the states in the U.S., agents may be “transaction brokers” who don’t have a fiduciary duty to either the buyer or seller. In many states, a customer has the option of signing an agreement for the agent to represent him as a listing agent or as a buyer’s agent. Before you start working with the agent, ask about your options and do some of your own research. Most brokerages require buyers and sellers to sign a form indicating that they understand whom the agent represents.