Straight Talk About Real Estate

I was a real estate agent when the mortgage brokerage business exploded onto the scene. Mortgage brokers were able to obtain loans for my clients at a lower cost than traditional banks and savings and loans where most people went for mortgage loans in those days. How were they able to do that?

A mortgage broker worked with wholesale lenders and investors. By having lower overhead, and willing to take a lower margin of profit, the broker often extended lower rates and fees to the client.

They were also able to obtain loans for clients that were rejected by banks and S & Ls. The broker can shop different lenders to find one that would fit the client’s qualifications. All the client had to do was fill out one application instead of going from bank to bank, filling out numerous applications to see which one would approve their loan.

Now mortgage brokers are commonplace. Banks are trying to get back some of the loan business by advertising more programs than they used have in the past. But brokers continue to offer many benefits to the client. However, you do have to be careful who you work with. As with any business, there are unscrupulous brokers out there who will take advantage of you and you may end up worst than going to your bank for a loan.

More on this later.

“Make biweekly payments on your mortgage and pay off your 30-year in 24 years, save thousands of dollars in interest. “

Sounds good? Wait, there’s more…

“There is a set-up fee of $300, plus a $5 service fee with every payment.”

That’s a small price to pay for saving thousands, right? WRONG!

How would you like to save the same amount of interest with absolutely no fee?

All you are doing when you make a biweekly payment is making an extra payment each year. You can do that easily yourself. There are 2 ways to handle it:

1. Take your monthly payment and divide by 12. Add that amount to each month’s payment. It is vital you include a note with your payment to explain the extra amount goes towards principle. Otherwise the loan servicing department may not credit it correctly. You may even have to write a separate check for the extra amount.

2. You can make an extra payment at the end of the year. Again, include a note with your payment to tell the servicing department to credit it towards your principle. Otherwise, they will assume you are making a regular mortgage payment.

See, I charged nothing for saving you thousands of dollars in interest.

If you are a homeowner, you can sell your primary residence, make a profit of up to $250,000 if you are single, double that if you are married, and not have to pay any taxes on that gain. There is no limit to how many times you can do this, providing that each sale is two years apart.

As with all good news, there is the fine print: some restrictions apply. Those exceptions has to do with converting rental property into your primary residence. We will discuss that another time.

In today’s rising house values, this IRS rule allows the empty-nester to pocket their gain, use the money to buy an RV and travel the world. You do not have to buy a replacement property (unless you want to).

What are you waiting for? Start looking at travel brochures, and call me to sell your house!