Real Estate

Inheriting a House Recipe

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Inheriting a House Recipe 1

Fortunately, the recipe for inheriting a house can be a simple one. Of course, there are potential complications, but those belong in the alternative versions of this recipe for what to do when you inherit a house. Ingrdients for a House Inheritance Finance Recipe Taxes On an Inherited House The first thing most people think of when they inherit a house is taxes. Between politicians running scare stories to boost their election chances, newspapers and financial news sources running edge-case scenarios with big, bold, headlines for clicks, or just those horror stories your less financially literate friends repeat, it can seem like the IRS is waiting to repel agents out of helicopters onto your parents’ old house to sieze it before you can set foot inside. The reality is, you probably won’t pay taxes on an inherited house at all. Capital Gains and The Tax Basis Before you start cooking up a tax avoidance scheme for the house you inherited, you need to know how the capital gains and tax basis ingredients work. The only taxes you, your parents, or great uncle, or anyone else, would pay on a house are capital gains taxes and property taxes. Capital gains taxes …

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Should I Sell My House Now?

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sell my home now

As the housing market appears to be peaking, at least for now, a number of people are pondering whether or not to sell their home. But, answering should I sell my house is not a simple question. Is Now the Right Time to Sell My House? Let’s start from the beginning. Assuming you only own one home, the one you live in, the question about whether or not to sell your house now is mostly moot. You need your house to live in. You need it to be in a certain location so that you can go to work, your kids can go to good schools, or so that you are near all the things you love to see and do. Reading too much financial news and information is no different than spending all day consuming “news.” Either way, you develop a warped sense of the world around you. You start seeing your life as a series of financial transactions. I used to see this as a financial planner with people who were doing just fine but were giving themselves ulcers by constantly evaluating their lives through their bank accounts. Your life is not a spreadsheet. Selling the place you …

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Should I Pay Off My Mortgage Instead of Investing

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Should I Pay Off My Mortgage Instead of Investing 2

Figuring out what the best thing to do with your money can be difficult. Many people get caught up in all the possibilities. They wonder if it is wise to pay off your house mortgage. Should they pay off credit cards or put higher down payment on a new home? Should I pay off my car loan with a home equity loan? Is it better to pay off your house or keep the money? And, most of all, should I pay my house off at retirement? We have discussed if it is smart to pay off your home early before. Unless paying off your home still leaves you with a sizable amount of cashable assets, the answer usually is not what you think. For people without substantial assets remaining after paying off the mortgage, owning your house free and clear does nothing but trap a lot of money where you can’t get it, inside your house. Financial professionals call the equity in your home that you are not going to sell “dead equity.” Here is what to do with your assets before you pay off your mortgage, and, a quick look at understanding the pros and cons of a reverse …

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How To Pay Off Your Mortgage Early The Smart Way

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dream of paying mortgage off early

There are a lot of people out there who dream of paying off their mortgage early. As a financial advisor, I would often have to talk them out of unusual schemes for paying off their house early, like raiding their 401k. It isn’t a bad thing to pay off your mortgage, but it isn’t as great, or as simple, as you might think either.   The Right Way To Pay Off Your Mortgage Early Instead of raiding your retirement fund, or cashing in Aunt Nancy’s inheritance, the best way to pay off your mortgage early is to add a little bit of extra principal each month. Just like saving each month adds up over time, so does paying off your mortgage. Each extra bit of principal you pay not only lowers the principal, but it lowers the amount of every payment after that going to interest. So, if you add an extra $20 per month starting with payment one on a thirty year mortgage, that’s going to add up to a lot of extra principal; it’s just going to take a very long time. In reality, those extra payments won’t add up to much until near the end of your …

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Zillow Can Keep Zestimating

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are zillow zestimates accurate

If you have had even an inkling of interest in real estate in the last few years, you have probably heard of Zillow, the online real estate website. It’s one of many online financial services shaking up the game like the Acorns savings app, or the Digit app. Zillow built its audience on the concept of a Zestimate, and online, computer-based algorithm that provides an estimate of the value of your home. People love seeing what their house is “worth” today, this month, and over time. The Zestimate is updated as often as the algorithm gets new data. Are Zestimates Real Estimates? Zillow has had to fight off people from the real estate industry who don’t like the company giving people ideas that makes it harder to earn that real estate commission. Sometimes, it makes people think their house is worth too much, and sometimes it makes people think the house they want to buy is overpriced. Either way, that is a headache for realtors and real estate agents. According to a recent lawsuit, it also caused problems for home builders who accused Zillow of hurting their ability to get the proper sale price for their homes by publishing Zestimates …

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The Uncorrectable Housing Shortage

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low cost housing density home

Here in Colorado, there is a housing shortage, especially near the bigger cities where the majority of people live, like the Denver metro area, Boulder, Ft. Collins, Loveland, Colorado Springs, and so on. The problem is in many ways self-inflicted. There are only so many buyers looking for houses above $500,000. There are many more buyers looking for houses below $500,000, and even more looking for houses below $300,000. A subdivision of homes priced between $200,000 and $250,000 would likely see a months-long waiting list in just hours. Why No One Builds Lower Priced Homes Anymore During the last housing crunch, buyers (like me) lined up to by houses from builders based on models. You put your name in the lottery for a lot, and then got to customize the house. The downside was that you had to wait the better part of a year to actually move into your new home while they were buying it. Back then, different builders built to different price points on large tracts of land. If you couldn’t afford the houses being built by one builder, you went with a different builder in that development. Check out my WalletHub review. Today, most builders are …

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Reverse Mortgages Scam or Legitimate Financial Tool?

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I’ve been getting questions about reverse mortgages lately. It’s not surprising. Reverse mortgages are one of those financial planning tools that are very useful for a specific purpose, and for specific people, that has, unfortunately, been sold aggressively to others. Not all reverse mortgages are scams, but you have to understand what you are getting from reverse mortgage lenders when you sign up. In other words, there is a lot more to a reverse mortgage than what you see on that television commercial or Facebook ad. What Is a Reverse Mortgage? Let’s start from the beginning so that we have a solid footing. What is a reverse mortgage? The most common way to explain reverse mortgages is to say that the definition of a reverse mortgage is when a reverse mortgage lender gives you a lump sum of money for the equity in your home and then gets the home when you die. However, this is a little bit deceptive in that there is more to it than that. Let’s look a little deeper to see what is really going on. First, let’s look at a regular mortgage, or a forward mortgage, if you will. With a traditional mortgage, a …

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Paying Off Your House Mortgages and Money Psychology

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By any measure, the math says that paying off your home is not a smart move financially. Then why is it that so many people see paying off their home as a great goal? There are three reasons really. One is out of date thinking, the other is a financial myopia, the last one is No Discipline Syndrome. Out of Date Out of date thinking, or as I like to call it “Old Timey Wisdom” (like in Oh Brother Where Are’t Thou – Old Timey Music). Old Timey Wisdom is wisdom that was once true in different times but may not hold up today. Just one generation ago, paying off your house meant financial security. Often, this was a major deal to this generation, because one generation before a lot of people lost their homes at various times, but most notably during the Great Depression. The wisdom became that as long as your house was paid off, you never had to worry about a huge part of your financial security. So what is different today than just a few decades ago? Well, then, it was likely that the first house you bought could be the one you lived in your …

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What Is a Good Mortgage Rate Today?

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When shopping for a home loan, it can be tough to tell if a certain mortgage rate is good these days. The trick is that all matter of gobbledygook can complicate what you are looking at when shopping for a good mortgage rate. In fact, the mortgage companies and mortgage brokers have made it pretty hard to know exactly what is the best mortgage rate today, or any day. Lookup Good Mortgage Rates First, stop worrying about what the “best” mortgage rate is. Chances are that the best interest rate for your mortgage is different from someone else. This is due to differences in credit scores (check your credit scores for free with Credit Karma, or Credit Sesame), differences in home price, and differences in areas. Then, don’t forget that like anything else, the advertised price for a mortgage is only for a specific mortgage in specific circumstances. One of the few good things to come out of the Great Recession and the near-collapse of the banking system is the Consumer Financial Protection Bureau, or CFPB (who for inexplicably uses lowercase latter for their logo). The CFPB has been building out not only an enforcement division to help protect consumers, but …

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How To – Refinancing a Home Mortgage Steps and Tips

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When considering refinancing your home mortgage, the first step is to get all of the details on what you have now.  Sure, you have vague numbers in your head, but that won’t help you answer all of the loan application questions, or make a real hard-numbers based calculation about the value of refinancing.  What exactly do you need to know before you dive into looking for low interest rates and refinancing your mortgage? Required Information Before Researching Interest Rates and Refinancing Current Balance of Home’s First Mortgage – Not a ballpark, an exact number according to your last statement. Current Balance of Home’s Second Mortgage or HELOC – Again, the number from the last statement. Current Interest Rate – What are you paying on your mortgage right now? ARM or Adjustable Interest Rate Features – When does your rate go up? (The actual date, not just the year.)  How much can it go up in the first year?  The second year?  Each year after that?  Is there a floor (minimum)?  Is there a ceiling (maximum)? When Did Your Mortgage Start? – What day did you close on? Current Home Value? – Check Zillow and Trulia to get a ballpark.  Print …

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