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The Peggy Graves Team

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Will Points Make a Difference

by The Peggy Graves Team


Lenders typically quote mortgages at a market rate but can offer a lower interest rate loan if the borrower is willing to pay points up-front which is considered pre-paid interest.  These points are generally tax deductible for the year paid when the borrower pays them in connection with buying, building or improving their principal residence.

A point is one-percent of the mortgage amount.  A lender will quote a lower-rate mortgage with a certain number of points.  There is not a standard amount; it is an individual company policy.

A simple comparison of the two alternatives based on the borrower's ability to pay the points and whether the borrower will stay in the home long enough to recapture the costs will help to determine which loan will provide the cheapest cost of housing.

In the example below, two choices are compared; a 4.25% loan with no points vs. a 4.00% loan with one point.  If the buyer stays in the home at least 69 months, they will recover the $3,150 cost for the point on the lower interest rate.

If the purchaser stays ten years, he'll save two thousand three hundred dollars over the cost of the point.  A less obvious advantage will be realized because the unpaid balance on the lower interest rate loan will results in an additional $2,076 savings.

Points a Difference.png

Use this Will Points Make a Difference app to discover whether paying points will make a difference in your situation.  This is an example of a permanent buy-down but temporary buy-downs are also available.  A trusted mortgage advisor can help you determine alternatives.

For more information about the deductibility of points, see IRS Publication 936 and if you're refinancing a home, there is a section specifically on that.  For advice on your specific situation, contact your tax professional.

Open Houses 3/10/2019

by The Peggy Graves Team

More than just an address

by The Peggy Graves Team

For a short time after the housing crisis a decade ago, some homeowners thought the value of home is a place to live rather than an investment.  A home certainly has an appeal as a place to call your own, raise your family, share with your friends and feel safe and secure.  It can be more than an address; it can also be one of the largest investments homeowners have.

Most mortgages apply a portion of the payment toward the principal amount owed in order to pay off the loan by the end of the term.  This acts like a forced savings for the homeowner because as the loan is reduced, the equity grows which increases their net worth.

The other contributor to equity is appreciation.  Most homeowners don't realize the increase in value until they sell the home or do a cash-out refinance, but the increase is real and part of their equity.  If the expected appreciation is averaged over the anticipated time for the home to be owned, the value of the equity increase can be proportioned annually or monthly.

Combining appreciation and principal reduction with leverage, it's possible to build a case that a home is definitely an investment.  Leverage is the ability to control a larger asset with a smaller amount of cash using borrowed funds.  It has been described as using other people's money to increase your yield and it applies to homeowners and investors alike.

The table on the picture above shows that even a modest amount of appreciation combined with the amortization of a loan can cause a substantial rate of return on the down payment and closing costs.

This example assumes a 3% acquisition costs on the home with a 4.5% mortgage rate and the resulting equity at the end of five years.  The larger down payments lower the yield because it decreases the amount of borrowed funds.

If a borrower buys a home that appreciates at 2% a year with a 3.5% down payment on a FHA loan for 30 years, the down payment and acquisition cost factored by the equity will produce a 28% return on investment each year during the five year period.

A home can be many things including an investment.  You can use this Rent vs. Own calculator to see the effect that appreciation and principal reduction can have on a home purchase in your price range.  If you have any questions, I'm a phone call away at (731) 225-6920.

Do you know the way?

by The Peggy Graves Team

Fear of the unknown is common among all ages.  Kids, at night, imagine monsters in their closets or under their beds and adults are unsure of what the future might bring.

It may be natural for first-time buyers to be unsure of the process because they haven't been through it before but even repeat buyers need to know changes that have taken place since the financial housing crisis.

The steps in the home buying process are very predictable and generally follow the same pattern every time.  It certainly makes the move stay on schedule when you know all the different things that must be done to get to the closing.

  • In the initial interview with your real estate professional, you share the things you want and need in a home, discuss available financing and learn how your agent can represent you in the transaction.
  • The pre-approval step is essential for anyone using a mortgage to purchase a home to assure that they're looking at the right price of homes and so they'll know what they can qualify for and what the interest will be.
  • Even with lower than normal inventory, it is difficult to stay up-to-date with the homes currently for sale and the new one just coming on the market.  Technology has simplified this process, but the buyer needs to implement them.
  • Showings can be accommodated online through virtual tours, drive-bys and finally, a personal tour through the home.  Your real estate professional can work with you to see all the homes in the market through REALTORS®, builders or for sale by owners.
  • When a home has been identified, an offer is written and negotiation over price, condition and terms takes place.
  • A contract is a fully negotiated, written agreement.
  • Escrow is opened to deposit the earnest money from the buyer as a sign they're acting in good faith.  The title search is also started so that clear title can be conveyed from the seller to the buyer and that the lender will have a valid lien on the property.
  • 88% of home sales involve a mortgage.  The lender will require an appraisal to be sure that the home can serve as partial collateral for the loan.  If the buyer has been pre-approved, the verifications will be updated to be certain that they're still valid.  The entire loan package when completed, is sent to underwriting for final approval.
  • When the contract is completed, at the same time the title search and mortgage approval are being worked on, the buyer will arrange for any inspections that were called for in the contract.
  • After all contingencies have been completed, the transaction goes to settlement where all the necessary papers are signed, and the balance of the buyer's money is paid.  This is where title transfers from the seller to the buyer.
  • Possession occurs according to the sales contract.

One of the responsibilities of your real estate professional is to make sure that things are done in a timely manner so that the transaction will close according to the agreement on time and without unforeseen or unnecessary problems.

Even if you're not ready to buy or start looking yet, you need to be assembling your team of professionals.  Let us know and we'll send you our recommendations, so you can read about them on their websites.

If you have any questions, download this Buyers Guide and call us at (731) 225-6920; we're happy to help.  Informed buyers lead to satisfied homeowners and that is better for everyone involved.

International Junior Miss Tennessee Pageant

by The Peggy Graves Team
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  • University School of Jackson262 McClellan Road 
  • Jackson, TN, 38305
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Exotic Pet Expo, Sunday 2/16

by The Peggy Graves Team

Exotic Pet Expo

EXOTIC PET EXPO

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  • Jackson Fairgrounds800 South Highland Ave. Jackson TN, 38301 
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Own a vacation home right here in Jackson

by The Peggy Graves Team

65 Barrett Place is an amazing property located in Country Club Estates.  This home offers an attached, private in law suite with full kitchen, private living area, bed & bath. Superior finishes throughout the home. A year round sun room overlooks a beautiful salt water pool with hot tub and backyard garden with water feature. The property backs up to the Country Club Golf Course. The price has just been reduced to $595,000! Call The Peggy Graves Team 731-225-6920 for a showing!

CLICK FOR A TOUR! http://www.tourfactory.com/1996411

Check out this Southern Beauty!

by The Peggy Graves Team

Open House Sunday, Jan. 27

by The Peggy Graves Team

Open Sunday, Jan. 27 from 2p-4p. Check out 89 Sarasota, Jackson. $369,000. This home has great curb appeal, a spacious open floor plan. 2 bedrooms on the main level and 2 or 3 bedrooms up. Entertain guests in the private backyard with salt water pool, outdoor kitchen and large covered patio.


 

Price Reduction!

by The Peggy Graves Team

15 Willow Branch Drive - Jackson, TN - $179,900

This wonderful 4 bedroom, 2.5 bath home is located in a quiet cove in a beautiful neighborhood in north Jackson. You will love the spacious great room with vaulted ceiling and fireplace, large eat in kitchen, dining room and private master bedroom & bath. There are 3 spacious bedrooms, a full bath and lots of attic storage upstairs. The shady backyard is great for relaxing or playing and you will have plenty of space for your outdoor tools in the storage shed.

Displaying blog entries 11-20 of 181

Contact Information

Photo of The Peggy Graves Team Real Estate
The Peggy Graves Team
COLDWELL BANKER REAL ESTATE NOW
327 North Pkwy.
Jackson TN 38305
Cell: 731-225-6920
Main Office: 731.668.1777

Lic. No. 00220561