Updated: Wednesday, November 25, 2020
What is a VA Home Loan?
If youre a service member or veteran in the United States, you might be eligible for a Department of Veterans Affairs VA home loan. The spouse of a service member or veteran may also be eligible for a VA home loan. The entire objective of this program is to help veterans and service members obtain a mortgage with little-to-no money down.
The Department of Veterans Affairs guarantees a VA loan. The government doesnt make the loan. Instead, since the federal government is backing it, lenders feel more comfortable offering the loans even to higher-risk borrowers. The backing of the federal government mitigates the risk for the lender.
Along with being able to get a loan without a down payment, sometimes the program has less stringent credit requirements too. You still have to meet some requirements, and you have to be approved by the lender, but it facilitates an easier path to homeownership.
There are requirements as far as your military service that you have to meet for VA loan eligibility. The requirements include that you are currently a veteran who was honorably discharged or that youre active duty military.
You must have at least 90 days of consecutive active service during wartime or at least 181 consecutive service days during peacetime. You may also be eligible with more than six years of service in the National Guard or Select Reserve.
If youre the spouse of someone who died in the active line of duty, you could qualify for a VA loan.
To go through this home loan process, you need a VA Certificate of Eligibility called COE.
To get a VA COE, you can go online to the VA and fill out an application through their eBenefits portal, or you might be able to apply through your lender if youve selected one.
How Does It Work?
First, as was mentioned, you need to fill out VA paperwork to verify your program eligibility. Youll receive an entitlement, which is an amount guaranteed on each loan. Lenders may be willing to give you a loan thats up to four times more than the entitlement.
Then, you can get a VA loan without a down payment. Instead of paying mortgage insurance, you pay a VA funding fee.
The entitlement is an important part of a VA loan, and there are two types. The first is a basic entitlement which is the lesser of either 25 of your total mortgage or 36,000. The second is called a bonus entitlement, which is up to 25 of the FHA loan limit, minus the basic entitlement.
A lender is going to have their own criteria for who theyll lend to, but typically you need to be able to show you have adequate income to cover your mortgage payments. Youre not likely to be approved if you have a lot of existing debt. Also, there isnt a minimum credit score requirement, but you have a >
How Do You Apply?
Youll need first to get all of the necessary documents and paperwork completed through the VA. Then, youll have to find a lender that does VA loans because not all do. An experienced VA lender will be able to walk you through the process and answer your questions.
Youll still need to compare their loan terms and rates and comparison shop for the best deal.
Finally, if you have a full loan entitlement, there arent any limits on how much you can finance. However, entitlements are based on conforming loan limits. Also, lenders will more than likely have criteria dictating how much you can borrow.
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Should You Use a HELOC for a Renovation?
A lot of people, thanks to low interest rates, are thinking about home renovations right now. You have different options to pay for these projects if youre not going to pay in cash. One option is a Home Equity Line of Credit or HELOC.
A HELOC is a way to borrow against your homes equity, and it provides flexibility. With that being said, because of that flexibility, you need to be careful to stay on budget when you use funds.
The following are some things to know about a HELOC, particularly if youre thinking about using it for a renovation.
How Does a HELOC Work?
With a HELOC, youre spending in a way thats similar to a credit card. You borrow up to a certain limit as defined by your lender. Then, you pay back whatever you borrow with interest. You can withdraw and make payments on whatever basis works best for you.
A lender gives you a draw period, which is the time you can withdraw money. When your draw period is ended, you may be able to renew the credit line.
If you dont or cant renew, you pay the outstanding balance either all at one time, or you do so over a repayment period.
HELOC lengths can run as long as 30 years.
The benefits of a HELOC and flexible repayment include the fact that you only borrow what you need, and many have no fees. The interest on a HELOC might be deductible if you use your funds for home improvements.
What Are the Risks?
While HELOCs can work well for funding a renovation, there are possible risks to be aware of before you borrow.
Since your home is your collateral, if you dont make the payments, you could lose your home. Typically a lender will try to protect against this by limiting borrowing amounts, but its still a big consideration.
A lender can also freeze a credit line or reduce it. Youll only see this usually if you havent made your payments or your homes equity changes, but its something to think about.
The interest rates on a HELOC are variable, and theyre tied to the prime rate. If there are changes in the market, you may end up paying more so that uncertainty may not be ideal.
How Does a HELOC Compare to a Home Equity Loan?
A home equity loan is another financial product often used to fund renovations and home projects.
A home equity loan also involves borrowing against the equity in your home, which is used as collateral. A home equity loan differs from a HELOC because its a lump-sum loan rather than a revolving line of credit. You pay the loan back over its life plus interest, and you make those payments based on a set schedule. Most home equity loans have a fixed interest rate, which alleviates the worry of fluctuating market conditions impacting interest rates.
When is a HELOC the Right Choice?
If youre deciding between a HELOC and a home equity loan, the loan might be better if youre certain of the cost of your project. If youre comfortable with a fixed monthly payment, a home equity loan could be the better option.
On the other hand, a HELOC might be right if you want a lot of flexibility in how much you borrow. Maybe youre not sure about the scope of your project or what your budget will be.
The biggest differentiators between the two will come down to first, flexibility, and second, certainty. If you want flexibility, consider a HELOC. If you want certainty, think about a home equity loan.
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When Is the Best Day of the Month to Close?
Maybe youve heard this and maybe you havent, but when someone asks when the best time is to close on a contract its typically at or near the end of the month. Why? Because its how mortgage interest is accrued. When someone makes a mortgage payment on the first of the month, the payment doesnt apply to the month about to be lived in but instead its for the interest that accrued for the previous month. But at the settlement table when a purchase mortgage is taken out there are no previous occupied days, yet interest is still collected.
Its called prepaid interest and its an amount that includes interest on the first day of the new note up until the first of the following month. If a closing takes place on the 20th of the month, the lender will collect interest up to the first of the following month. In this example that would be 10 days. If on the last day of the month, there will only be one days worth of interest collected.nbsp;
Then, there would be no mortgage payment on the first of the following month because its already been paid. So, with a purchase transaction, it makes sense to close as close to the end of the month as possible. Some like to give a little breathing room and close on the next to last day of the month just in case something happens to cause a delay.nbsp;
The closing date on a purchase is clearly laid out on the first page of the contract. Closing must take place on or before that date. Any extension must be agreed to by both parties. Theres really no wiggle room about that. If the buyers cant close on the specified date, they run into the possibility of losing their earnest money deposit.
On the other hand, theres a bit of a difference as it >
When refinancing, there will be interest in arrears for the number of days for the old mortgage plus prepaid interest collected up to the first of the following month. Again, because the interest has been prepaid, there will be no mortgage payment on the first day of the next month because its already been paid.
During a purchase transaction the closing date is established upon execution of the contract. When refinancing, its completely up to the homeowners not just whether or not it makes sense to refinance but setting a closing date.
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5 Surprising Ways to Invest in Your House
One area that many people never think about changing is their driveway. Over the years, a lot of people have learned that they can expand their driveway to hold more cars. This is especially useful if you have multiple vehicles that members of your family drive.
In the average neighborhood, there is simply not enough space for more than a few cars. It is a small investment to expand the driveway of your home, and the potential future buyers will love this feature.
The kitchen is one of the most important areas of the home when it comes to selling. Cabinets are a central point of any kitchen. If you want to improve or replace your cabinets, it is vital to work with a company that has experience in the field. Look for cabinet refinishing companies near you through online sources.
The cabinets in your kitchen should flow with the rest of your home. With such a large investment of both time and money, make sure that you have conducted research on the best cabinets for your current home.
Tile in Bathroom
Another vital room in your home is the master bathroom. You will spend a lot of your time in this room, so it is important to make it as inviting as possible.
Upgrading the floors in your bathroom is a great choice. Tile is the most common piece of material to use. Not only does it last longer, but it looks much better than other options as well.
Heated tile is another feature that many people enjoy. In the cold mornings of the winter, heated tile can be a nice luxury. As soon as you walk on the tile, your feet will be heated and you will enjoy the bathroom experience much more. This is new technology that a lot of people are upgrading to.
Smart HVAC System
Everyone knows that a new HVAC system is not cheap. However, there are new HVAC systems that focus on reducing your total energy consumption. Although these units are still expensive, you will save some money every month on lower electricity bills.
With so many options on the market today, it is vital to spend some time finding the right model for your home. If you live in a cold area, make sure the heating unit is large enough to heat your entire home. In many areas, the upstairs part of the home is difficult to heat in the winter without a large unit.
Perhaps the easiest way to improve the value of your home is to simply paint the walls. New paint on the walls can really improve the look and feel of your home. Although you can do the painting yourself, it makes sense to hire someone who has experience painting.
Painting an entire house is a long process. Although it will not be cheap, it will improve the value of your home greatly. This is one of the best things to do right before you list a home on the market.
Investing in your home is one of the best financial decisions that you can make. As the housing market continues to improve in value, investing in your home will help you financially. You can even use the equity in your home to pay for the new upgrades that you want.
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How To Create Year-Round Home Curb Appeal
Exceptional curb appeal will add to the enjoyment and value of your property and home. Maintaining your curb appeal throughout each season may pose its challenges, but with these tips, you can ensure that your home and landscaping will look their very best throughout the year.
1 Clean It Up
A thorough power wash is essential for maintaining the cleanliness of your home, driveway and walkways. Many homeowners prefer to do this in the spring, but you might consider an additional wash in the fall as well. By keeping your landscape free of debris like broken branches and dead trees, you can better maintain the appearance of your property.
2 Planting for Seasonal Interest
Its helpful to plant with each season in mind to ensure that your landscape looks great year-round. Spring bulbs and flowering trees add visual interest to your landscape at the start of the growing season. A lush lawn and pots of colorful annuals can provide eye-catching appeal in the summer. Think about late summer perennials and deciduous trees or shrubs that boast spectacular fall colors. Evergreens are >
3 Vertical Interest
To avoid flat looking landscaping, be sure to include vertical interest. Arches, even when bare during the winter season, will add visual interest to your front yard. Hanging plants, vines, climbing plants, t>
Plants arent the only method of achieving excellent curb appeal. Consider replacing a worn-out front walkway with elegant cobblestone or brick pavers. Replace mulch with stone or encircle trees and shrubs to achieve a more formal look for your property. Boulders can be strategically placed to draw the eye and provide further visual interest for your setting.
5 Tackle Problem Areas
If you have a slope thats difficult to mow or a sunken section of landscaping that always seems to flood, consider a solution. A low-maintenance, terraced garden is ideal for sloping sections of land that are difficult to mow. On the other hand, there are no-mow grasses that can replace a traditional lawn. Installing adequate drainage for low-lying areas of your landscape can help reduce the flooding that occurs during stormy seasons.
6 House Appeal
You can increase the year-round curb appeal of your home by maintaining its outward appearance. A pleasing door, elegant fixtures, contemporary railings, eye-catching shutters and stylized window boxes will go a long way to boost your curb appeal. For an additional wow factor, consider expanding your porch or replacing worn siding to improve the appearance of your home.
Great curb appeal begins with assessing your current setting. When you do install new features, its important to consider how they will appear during each season.
Andrea Davis is the editor for HomeAdvisor, which helps homeowners find home improvement professionals in their area at no charge to ensure the best service in the shortest amount of time.
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Should You Add a REIT To Your Investment Portfolio?
A lot of people want to invest in real estate, but theyre not ready to flip properties or be a landlord. There are other ways to invest in real estate without having the responsibility of holding physical property. One way is a Real Estate Investment Trust or REIT.
The purpose of a REIT is to help individuals invest in income-producing real estate. A REIT will own and usually operate real estate or >
The REIT isnt a developer who aims to resell. Instead, they buy and develop properties to operate them as part of their portfolio.
Again, one of the big benefits of a REIT is that as an individual retailer investor, you can own a share of real estate income without going and buying commercial real estate.
How to Invest in REITs
There are a few different ways to invest in REITs. In general, you buy shares listed on stock exchanges. You can also purchase shares in a REIT ETF or mutual fund. An estimated 87 million Americans invest in REITS through their financial funds and retirement.
The price of REIT shares fluctuates throughout the trading day, like companies with publicly-traded stocks.
The four types of REITs are:
- Equity REITs: Most REITs that are publicly-traded are equity REITs. Equity REITs own or operate real estate that produces income.
- mREITs: These are also called mortgage REITs, and they produce income by having mortgages or originating them and mortgage-backed securities.
- Public non-listed REITs: These are SEC-registered REITs that dont trade on the national stock exchange.
- Private REITs: These are SEC registration-exempt and dont trade on the national stock exchange. Usually, theyre only available to institutional investors.
If you want to buy shares of a REIT listed on a major stock exchange, the process is the same as buying shares of another public company. If you buy an ETF or mutual fund, you may find more liquidity than buying traditional shares.
Buying private REITs is more complex, with them being limited to accredited and institutional investors.
What Are the Pros and Cons of Investing in REITs?
Some of the benefits of adding a REIT to your portfolio include:
The biggest advantage is exposure to real estate. You dont have to acquire properties directly, and you can still take advantage of the upside of the real estate market. Owning real estate directly can be lucrative but also risky and time-consuming.
REIT companies must payout at least 90 of their taxable income to their shareholders, so theyre a good option for dividends. You could use REITs as a source of income.
Theres diversification with REITs. Real estate is an asset >
The downsides of REITs include:
The dividends earned on REITs are usually taxed at a higher rate than the dividends of traditional stocks.
Theres a high level of risk and volatility that comes with REIT investment, even though they dont always follow the market. There can be big swings in the real estate market and the economic market in general that have a massive impact on the volatility of REITs.
Whether or not to invest in a REIT depends on a few factors. First, how risk-averse or tolerant are you? Second, are you interested in adding something to your portfolio that tracks the real estate market? Is this a better option for you than a traditional real estate investment?
Theyre all things to ask yourself about REITs, which do have the advantage of beingnbsp;income producers.
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HOA Group Think
Homeowner associations are often portrayed as the detached governed by thankless volunteers. Its the blind leading the blind or rather the clueless in charge of those that could care less. So how should this union of the unwilling go about acquiring the wisdom it needs?
James Surowiecki makes the case that a group is smarter than the smartest individual in his book "Wisdom of Crowds." Surowiekis research indicates that the wisdom of answers from those with only general life experience exceeds the wisdom of world experts. Here are some excerpts from an interview:
How did you discover the wisdom of crowds?
"The idea really came out of my writing on how markets work. Markets are made up of diverse people with different levels of information and intelligence, and yet when you put all those people together and they start buying and selling, they come up with generally intelligent decisions. I realized that it wasnt just markets that were smart."
Could you define "the crowd"?
"A "crowd" is any group which can act collectively to make decisions and solve problems. So, big organizations like a company count as crowds and so do small groups, like a team of scientists working on a problem. But so are groups that arent really aware of themselves as groups, like investors in the stock market. They make up crowds, too, because theyre collectively producing a solution to a complicated problem: the choices of investors determine stock prices."
Under what circumstances is the crowd smarter?
"There are four qualities that make a crowd smart:
Diversity. Group members are bringing different pieces of information to the table.
Decentralized. No one at the top is dictating the crowds answer.
Summarizes Answers. Combines all member answers into one collective verdict.
Independent. Individual answers are independently arrived at without worrying about what others think."
And what circumstances can lead the crowd to make bad decisions?
"Bad answers are more likely when most of the group are biased in the same direction. When diverse opinions are squelched, groups tend to be dumb. It usually spells disaster when too much attention is paid to what others think. Stock market bubbles are a >
What kind of problems are crowds good at solving and what kind are they not good at solving?
"Crowds are best when theres a "right" answer to a problem. If there is a factual question, groups consistently provide the correct answer. Groups arent good at problems of skill -- for instance, dont ask a group to perform surgery or fly a plane."
Why are we not better off finding an expert to make all the hard decisions?
"Experts, no matter how smart, only have limited amounts of information. They also have biases. Its very rare that one person can know more than a large group of people, and almost never does that same person know more about a whole series of questions. Its actually hard to identify true experts."
How can the crowds collective wisdom help an individual?
"The principle works for individuals as long as the groups are diverse and individuals try to be as independent as possible."
Is the wisdom of crowds about consensus?
"No. The wisdom of crowds emerges from disagreement. Its the "average" opinion of the group, but not an opinion that every one in the group can agree on. Collective wisdom does not result from compromise."
Maybe youve been planning a remodel for quite some time, and youre finally getting started. You might be doing a large-scale remodel to make your home more functional for your family, or perhaps the plan is to get it ready to sell.
Regardless of why youre remodeling, theres a big question that will arise: should you stay, or should you go? Meaning, should you move out while the work is being done?
The following are some of the things to think about as you decide.
Is Moving Out a Realistic Option?
If you have family or friends that are willing to take you in for a period of time, this may not be a concern, but otherwise, can you realistically afford to move out? If youre paying several months of rent, for example, think about how much this will add to your total renovation costs.
It could be thousands or tens of thousands. Thats even if you can find a short-term rental for the window of time youll need.
Even if you technically have the money to move out and into temporary housing, could that money be put to better use in the remodel itself?
Do You Work From Home?
A lot of people work from home for the foreseeable future because of coronavirus. If youre one of them, and perhaps your spouse is as well, you may need at a minimum a >
Working in a construction zone can be even tougher than trying to live your day-to-day life in one.
Maybe staying throughout your renovation would cause your productivity to take such a hit that you just cant manage it, in which case you might move out.
Staying Could Extend the Timeline
If you stay during a remodel, the contractor is going to have to work around you. Theyre not going to be able to work hours that are as flexible such as in the evenings. Theyre going to be building their schedule around yours, which might mean that it takes longer to finish things.
Plus, youre taking up space, and your personal items are as well. That can slow down the process.
What Part of Your Home Are You Renovating?
Whether or not you move out can depend on your budget and timeline and what the project is. If youre renovating something like a kitchen or bathroom, it can make more sense to move out. Otherwise, you may have to set up a temporary area of your home for essential functions like preparing snacks and meals.
Of course, if youre doing a gut renovation you probably dont have any choice. Youll have to move out. Otherwise, in addition to the obvious downsides, you might also be exposed to toxic chemicals and fumes.
If youre renovating something like a basement or a living area, you might not have to move. It could be that you can stay out of that area easily enough during the renovation. You just need to think about your needs and life>
Some homes have layouts that are more conducive to staying put during a renovation too. For example, maybe you have a multi-level house so you can confine most of your activities to one level or the other during renovations.
If you do stay in your home, but you restrict yourself to an area where work isnt being done, you can rent a storage pod so you can completely empty the work area. This will keep your furniture and other items protected, and it will also make it easier for the people who are working.
Safety is another issue that is likely to sway you in one direction or the other. If you dont have kids or pets, or your kids are older, this might not be a concern. If you do have kids or pets, staying in your home during renovations can be a safety concern.
The contractor and subcontractors should make an effort to keep their work areas sectioned off, but worksites are inherently risky.
If youre trying to decide whether or not to move out during a remodel, theres not one right answer that works for everyone. It depends a lot on how much you can tolerate in terms of inconvenience, your family and life>
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The Pitfalls of Fractionalized Deeds of Trust
Many investors like the alternative lending space where they can invest in mortgages, otherwise known as, Trust Deed investing, whereby they become the lender on real estate. The two major ways to invest in these mortgages is either in some kind of pooled investment [a Fund], similar to a mutual fund or owning the deed of trust on a specific piece of real estate, similar to owning an individual stock.
In the case of investing in a Fund, the investor invests in the Fund, and the manager chooses which loans to make to borrowers. In the situation of owning an individual deed of trust, the investor chooses which specific loan to invest in and is recorded on title. It is the latter that is the focus of this article, and specifically fractionalized deeds of trust where the investor shares ownership in the investment with on or more other parties.
Most note brokers [in California; other states may vary] are licensed to fractionalize a deed of trust [notes] with up to 10 owners [beneficiaries]. Other brokers have licenses from the Department of Corporations to have more than 10 beneficiaries. The reason brokers fractionalize notes isnbsp;usually because they are too big for one investor. A 40,000 note may be able to find a home with one investor, but a 700,000 note may need more than one investor in order to be funded. Each investor receives a recorded deed of trust [for their protection as evidence for their loan]. When the borrower pays the loan off, each investor is required to reconvey their interest in the loan [notarized signature] in a timely manner [California requires this be done within 21 days of the request]. The reconveyances are deposited in escrow, and each lender is paid off in escrow as well.
If everything goes smoothly, no one complains; however, what happens if things dont go according to plan? What if a lender is unavailable to sign off in a timely manner? What if a lender refuses to sign? What happens if the borrower defaults on a fractionalized loan? What happens if you have a minority interest [less than 50 ownership] in a fractionalized loan? These are just a few instances where a fractionalized lender faces challenges, and these challenges can be monumental.
First, lets look at a simple situation where a 900,000 loan has been fractionalized into 9 different lenders [each having 100,000 ownership in the loan] and 8 of the 9 lenders signs the reconveyance paperwork in a timely manner but one chooses not to sign [in time, or not at all]. Why would the lone lender choose not sign? What if the loan was very well secured and the note was yielding a higher than market rate of interest? A nave lender may think that they can enjoy the higher interest for longer than allowed [not signing in a timely manner]. This situation is not as far fetched as one might think. In the 1990s, first deed of trust notes yielding 12 were not uncommon. When rates dropped dramatically, borrowers were quick to refinance. One investor tells the story of how a 12, 1.2M loan was trying to be refinanced by the borrower at 9 with a new lender. The fractionalized note had 5 owners. 4 of the 5 had their reconveyances notarized and delivered to the escrow company in a timely manner. The last investor had 500,000 in the note and did not want to lose his 12 rate; he was under the misconception that he could just keep coming up with excuses as to why he was not able to get to a notary [he was a busy surgeon]. After more than a month went by, the borrower sued all of the lenders for the difference in the rates  plus attorney fees. Although thenbsp;lone holdout was ultimately responsible, all of the other lenders had to defend themselves, which put undue burdens upon the innocent 4 lenders.
Next, lets look at a situation where a majority [over 50] lender chooses to extend a loan when it matures, and a minority lender does not. Unless the minority lender requests a partition action so as to separate himself from the majority lender, the majority lender is in control of the fate of that loan.
Dealing with foreclosures by the lenders introduces an enti>
Thus, foreclosing may not even be possible if the note holders cannot agree to their destiny or come up with the funds needed to file the paperwork to foreclose [which can be many thousands, depending on the size of the loan].
Other issues arise even if foreclosure has been started; one lender tells the story of how the borrower stopped making payments to both the 1st and 2nd mortgage. This particular lender was one of many in the 2nd mortgage. The 1st started the foreclosure process. Nobody in the 2nd mortgage wanted to cure the 1st. There was an offer by an independent 3rd party to purchase the property for the 100,000 over the1st mortgage, which would have been given to the 2nd [which would have paid its loan down but not off]. There were 25 beneficiaries on the 2nd DOT. 24 of them chose to allow the salenbsp;and take the 100,000, which would have amounted to a short sale; however, the one lone holdout, who represented only 4 of the 2nd, refused to sign off on the sale. His reasoning? He stated that he believed that, at the foreclosure sale, someone would bid the property up more than 100,000 over the 1st. Not only was this illogical [based upon the value of the property], but it went against his previously signed documents stating that he would go along with the majority, opening himself up to a lawsuit by the other lenders. The title company refused to give title insurance to the potential buyer, and the sale never went through. At the trustee sale, one bidder bid just over the 1sts credit bid, and the 2nd walked away with zero.nbsp;
Many individual trust deed investors believe they are protected from many perils if they own over 50 of the note, as most states have a rule that the majority holder makes the rules; however, title companies are not bound by such laws. If they refuse to give title insurance, any prudent would-be buyer of the property will walk away.
Another issue is that an investor in a note does not have to come up with his fair share of the money it takes to file foreclosure, and there is no provision that states that other investors who come up with more money get a preference, so it is difficult to maneuver a foreclosure unless each person comes up with his percentage required.
Other not infrequent situations come up where the borrower wants to do a loan workout or re-write the note. Unless all parties agree, everything is at a standstill. Some unethical fractionalize note holders will sometimes hold this over on the rest of the note holders by demanding a larger share than they are entitled to or demand that the other investors buy them out.
For these reasons, many investors have turned to Funds where the Fund manager handles the foreclosure paperwork, pays the fees, and sees the entire process through.
The takeaway here is that one needs to be extremely careful if one wants to invest in a fractionalized note not only do you want to own more than 50 of the note, but make sure you know every other owner and have like minds, which, in todays world, is more than a daunting task.
Home buyers who had their real estate plans interrupted by the pandemic may benefit from a reset before they plunge into the current real estate market.
Buyers whose real-estate buying efforts stalled in March 2020 may benefit from reviewing their must-have list and how they created it.
Buyers whose pandemic experience triggered a work-from-home must-have list may benefit from adopting a long-term view of how they need home to function for them and their family.
How much have your experiences during the pandemic changed your lists of real estate must-haves, dont-wants, and ready-to-splurge-ons?
Real estate buyers want a new homean invigorating space to spread out in, an affordable celebration of what theyve achieved, a comfortable shelter to share, somewhere to play, a place to belong.
Over the last few months, a lot has changed. The old normal has been replaced in ways that are only now becoming apparent.
Pre-covid, open conceptwhich is commonly created by tearing down interior wallswas a sought-after life>
Opening lines of sight and combining three, four, or more functional roomskitchen, dining room, livingroom, rec room, hobby room, studycreates an enviable airy living environment. Parents can see what children are up to; the family cook is part of the action instead of being shackled to the stove; entertaining is enhanced for guests who can scatter across welcoming spaces without missing out on anything.
After more than nine months of families isolating together in open-concept spaces 24-7, this unstructured environment hasnt provided the perfect life>
What makes looking after pre-school and small children easier may not work as well when your children are a few years older or in high school. For instance, teens value personal space and privacy so you may be sitting in the open space alone.
Working and schooling from home requires privacy and quiet for concentration. High ceilings, hardwood floors, and hard tile surfaces can become noisy nightmares. Balancing hard and soft surfaces with acoustical panels is an often-overlooked solution.
Cost can also be a factor. When you are only using one corner of your high-ceiling, open space, you will still have to heat or cool the entire volume 24-7.
Buyers, stop and think why you want what you want and what youll need over the next two or three yearsthat is, during and after the pandemic:
1. Where did your wants come from?
Do many of your must-haves reflect pre-covid working-away-from-home life>
2. Whats typical?
Talk to your real estate professional about the age, construction quality, common defects, and dated-design features of homes in your preferred area and price range. What will you getfeatures and building qualityfor your money and what might be beyond your price range or not readily available in those neighborhoods?
Know in advance what to expect, so you recognize realistic compromises and a deal you can enjoy living with.
3. How can you stretch buying dollars?
In view of your must-haves, where does value lie and how can you stretch your buying dollars? Will you buy a move-in-ready home, pay for extensive renovations, or tackle do-it-yourself make-overs of specific areas? Covid->
If renovation is part of your plan, dont jump into a home purchase without researching costs, wait-times for professional contractors, and completion times. Understand what youre getting into.
4. What does feels like home mean to you?
Ill know it when I see it and it must feel like home are common buyer strategies that dont always serve buyers well. Change paint color and furnishings and any room takes on a completely different feel. There may be more value in a house that is poorly decorated but that has good bones than a house cleverly staged to camouflage flaws and shortcomings, if not outright problems.
Invest time looking in magazines, at TV series, and online at before and after room make-overs to learn what it is about a room that designers see before they set to work transforming.
Measure your current rooms and larger furniture pieces to establish an understanding of how much space you really need to live comfortably.
5. Do you understand that What You Dont Know About Real Estate Could Cost You?
Its what you dont know about real estate that could cost you when buying or selling. What you dont know about real estate, real estate professionals do. Learn about significant knowledge gaps for buyers and sellers, and how professionals fill those gapswhen askedRead on
As always, a prepared buyer/seller is a confident buyer/seller
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What Are the Pros and Cons of Open-Concept?
If youve ever watched a real estate show, youve likely heard the number one thing buyers want is an open floorplan. Open-concept design has its perks certainly, but its not right for everyone and their needs. Despite it being so in demand, its important you think about those downsides you might not have considered.
What is Open-Concept?
An open-concept floorplan indicates a layout where there are large, open rooms and multiple functions within a single space. If you dont have a lot of square footage to work with, an open floorplan works well. If you have a large home, you might not need an open-concept plan because each individual room itself is so big.
Homes built before the 1990s tended to have a lot of separation between rooms. By the 2000s, the open floorplan was definitely the more popular option.
nbsp;The Pros of Open-Concept
The following are some of the upsides of a wide-open living area.
If you have a family, particularly with young kids, open-concept can make it easier for everyone to be together and for you to keep an eye on the kids even while youre doing other things like cooking. You get a sense of togetherness with an open floorplan.
Open floorplans help you make better use of space that would otherwise be unusable. For example, if you have a formal dining room, you may not use it often. With an open floorplan, youre more likely to use all of the space available to you.
If you entertain, open floorplans are undoubtedly ideal for you.
Taking out walls or having a design with limited interior walls allows for more natural light, and you can get outdoor views.
The Cons of Open-Concept
Again, while people rave about open-concept living, its not right for everyone. Downsides include:
If you have older children or multiple generations in your household, you might want the privacy that smaller rooms can bring to your home. If you have, lets say a nanny who lives with you or something similar, open-concept can bring you all together in a way that maybe you dont prefer.
If youre someone who loves to display items on your walls, youre going to have limited space to do so with open-concept. For art collectors, as an example, you might want more rooms and thus more walls.
If your kids regularly make a mess, have enclosed rooms can help you contain it to one room more easily, so it doesnt spill into other living areas.
Noise travels a great deal in open-concept plans.
You may want rooms that are dedicated to specific, individual uses. For example, maybe you want a home office, a workout room, or a crafts room.
If youre deciding on a new home or thinking about renovations, it doesnt have to be all-or-nothing with open-concept.
There is a middle ground. For example, maybe your living area and kitchen are open to one another, but your dining area is separate. There might also be designs where you put partial walls to provide some delineation between spaces without full closure.
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Using Income from Tips to Help Qualify
For those in the service industry, getting additional income from tips for many accounts for quite a bit of an employees take-home pay. In fact, its not unusual for someone working in a restaurant to get the majority of the income from tips as the employer pays a minimum wage. Tip income is a big deal. But when it comes to getting approved for a home loan, while tip income can be rather significant, borrowers need to be aware of how that tip income can be used to help qualify.
First, there needs to be a history of receiving it. Borrowers must be able to show receiving income over the previous two years. In addition, this income must also be consistent. Providing a two-year history helps lenders make the determination the income will continue into the future. But how the borrower treats the income is significant. Tips can come in the form of a few dollars left at the table or nightstand or included on the credit card slip. What the employee does next is critical.
Tip income must be logged. When an employer sends out W2 forms, the wages shown will typically be the minimum wage paid. Employers dont keep track of an employees tips, its up to the borrower to track it. There can be a manual log kept that keeps track of how much tip income was received and when. In addition, the tip income deposits must be verified.nbsp;
This is accomplished by reviewing past bank statements. For instance, an employee can collect tips on a daily basis but deposit the tip income weekly. These deposits must show up on these past bank accounts.
Further, the tip income must be reported to the IRS for the past two years. The income reported is the income lenders will use when qualifying, regardless of how much tip income has actually been received. For some, all the tip income might not make it to any bank account at all but instead spent on everyday expenses. Here again, while the tip income is in fact received, there is no third party record of having received it. Unless the income is deposited on a regular, consistent basis, it might not matter how much tip income is being received if there is no third party verification.
In general, lenders treat tip income just like any other in the way it can be verified and used for qualification. Lenders want to see a two year history of employment while showing the income is likely to continue. The income needs to come from a qualified source. The income must be received at >
If this sounds like you or someone you know and buying a home is definitely on the radar screen, its important to know ahead of time how to use this additional income. Lenders, employers and employees all know its there and available, but how its documented is important. If you dont really need tip income to help qualify, then theres no issue. But if tip income must be used, its crucial to properly document the receipt and keep an eye on reporting requirements.
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Smart Home Improvement Tips To Save You Time, Money, And Aggravation
Fixing up your house can bring great joy, and also personal satisfaction when you pitch in and DIY some of the tasks. But proper preparation is key to getting things done right. Take a short cut and youll likely end up with a project that that takes longer, costs more, looks like it was DIYd and hurts more than your bank balance along the way.
Measure thrice, cut once
Its the oldest tip in the book when it comes to renovation and its every bit as important as you think it is to make sure you have the right measurements before you start up that power saw. In fairness, the rule is typically, "Measure twice." But lets face it: Some of us need a little more assurance. If youre not super skilled at using power tools, if you have tricky cuts to make, or if youre doing anything with mitered corners or involving angles, do yourself a favor and take one more look before you slice away.
Buy more materials than you actually need
It can be incredibly tempting to buy only what you think you need when it comes to flooring materials, backsplash tile, or wall coverings, in an effort to save money. But problems can arise for a variety of reasons - some of the tiles are cracked, you cut some of the wallpaper incorrectly, some of the wood for the floors is warped, you didnt account for all the cuts you have to make when measuring the space - and soon you dont have enough materials to finish the job.
You can always order more, but now youre behind schedule. And, you may run into additional problems with your flooring if the new pieces dont precisely match the existing ones because theyre not from the same batch. Thats why experts recommend that when you purchase your materials, you add 20 to the actual measurements. It may add a few bucks to your bottom line, but it will save your butt in the long run.
Invest in some quality tools
Youre an adult now. You can have a real hammer and a drill and a pair of needle nose pliers. If youre just setting out on your own or its time to do a little tool upgrade, This Old House has some good tips for what tools to buy.
Try it before you install it
The well-meaning contractor who installed this faucet forgot about one thing: The space needed to actually wash your hands. Installing the faucet too close to the sink left insufficient space, so hand-washing is reduced to an awkward placement and cupping/pouring exercise. Before you drill those holes, give it a test run
Buy the right ladder, and use it properly
According to the International Association of Certified Home Inspectors InterNACHI, there are "more than 164,000 emergency room-treated injuries and 300 deaths in the U.S. that are caused by falls from ladders." In addition, "Falls from laddersnbsp;are the leading cause of deaths on construction sites, and, "The number of people who have died from fallsnbsp;from ladders has tripled" over the last decade.
If youre thinking those falls must have been from a roof or tall commercial building site, heres more sobering news: "Most ladder deaths are from falls of 10 feet or less."
You can check the InterNACHI site for basic ladder safety tips, but the most important thing to remember is this: Use your common sense. Use the ladder properly, dont balance on the paint tray, dont overextend the weight limit, make sure its in proper working order - you know, the basics.
Glove up, glasses on
While were talking safety, there are other measures youll want to take to protect yourself. The last thing you need is a nail through your hand or your eye or anywhere else, for that matter. Gloves and goggles are basic go-tos. And if youre doing your floors, think like a soccer player and get out those knee pads.
Between picture hangers and specialty nails and screws and laser levels, there are so many tools available to help you hang art that we should all have it nailed pun intended, right? Yet picture hanging remains one of the most frustrating tasks.
There are numerous tricks and tips that aim to help, but these are a few of our faves:
"Use a little bit of toothpaste yes, toothpaste," said Quick and Dirty Tips. "Place a dab of toothpaste on the back of the frame on the hook or string whatever will touch the nail. Then hold the frame up to the wall, position it carefully, and press it against the wall. The toothpaste will leave a mark that you can hammer a nail through, then wipe away."
"Instead of moving the photos up and down, place the photos on the floor and line up some tape from hanging point to hanging point," said Diply.com. "Then mark each point with a dot. Next, put the tape on the wall and use a level to make sure its straight. Then use those dots to put in your screws, and hang"nbsp;
Keep the mess away
We love this easy tip for keeping the site clean when hanging photos or drilling/hammering into walls for any other reason. If you hate having to clean up afterwardsdont. A sticky note is all you need.
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Top 6 Home Selling Tips In The Winter
1 Keep the house warm.
While you dont have to keep the heat on all the time, keep the house warm during showings. You dont want people shivering while they look through the house. Set the thermostat to at least 70 degrees -- whether youll be in the house or not.
2 Trim the outdoor foliage.
Remove snow from shrubs and trees so that potential buyers dont get wet as they walk up the sidewalk to your home. Brush off snow, prune the tree limbs and trim the hedges as needed. You can even hire a tree service to do this for you if youre strapped for time.
While your lawn is dormant this time of year, you can at the very least make it look well maintained to give buyers a sense of what it looks like during the spring and summer. You can also display photos in your entryway of how your home looks outside during the greener months.
3 Handle winter conditions.
If you have ice and snow on your driveway and sidewalk, you need to take care of it way in advance of showings. Clear ice and snow with shovels and salt, so that your exterior looks nice and safe to buyers. It will also increase the aesthetic quality of your home to buyers and keep you from getting sued by a buyer who falls or slips. If you have particular trouble with ice and snow, you can call a snow removal service to do it for you.
4 Show off the fireplace.
If you have a fireplace, you should showcase it as part of your homes aesthetic appeal. A gas fireplace is easy to turn on before a showing, and it adds natural beauty to your home -- not to mention warmth. A wood-burning fireplace is a bit harder to maintain, because you can run out of firewood. So you need to time the lighting just right before the showing. You also need to make sure the chimney is in good condition, so have it cleaned and checked by a fireplace professional ahead of a showing to avoid any problems.
5 Add comfort to your home.
There are other steps you can take to make your home more comfortable and inviting during the winter months. Focus on small improvements to your home like:
Adding blankets to your couch
Turning back the comforter on the bed
Baking a pie or cookies for the smell
Lighting some candles
Turning on some >
6 Make sure your home is well lit.
Since winter takes away a lot of sunshine, you need to utilize light bulbs and other forms of lighting. Outside lights, security lights, candles, LED lighting -- every bit of lighting is crucial in the interior and exterior. You want all lights on when buyers are walking through your home -- dont focus on your electricity bill right now. You also want to make as much use of natural lighting as possible. Open your window treatments during the day showings.
|Andrea Davis is the editor for HomeAdvisor, which helps homeowners find home improvement professionals in their area at no charge to ensure the best service in the shortest amount of time.|
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The Best Celebrity Recipes for an Easy and Impressive Thanksgiving Dinner
So you dont have a degree from Le Cordon Bleu. Or a Michelin star. Or a 47,000 stove yes, they actually make a 47,000 stove. You can still cook Thanksgiving like a James Beard chef.
No, really, you can.
All you need is a little time, a lot of patience, and a menu that includes the best Thanksgiving dishes from the best celebrity chefs. These dishes also happen to be on the easy side of gourmet chef-ery. You can thank us later we only accept bribes that are pumpkin flavored.
Herb-Roasted Turkey Breast
Why bother with a whole turkey when youre just going to end up with two-thirds of it left over? Instead, order a whole turkey breast from your grocer. Its much more easy to manage the cooking, and it wont end up packed to go for your guests and overflowing you dogs bowl at the end of the night.
Chef Ina Gartens herb-roasted turkey breast layers on the fresh rosemary, sage, and thyme for a tasty - and fragrant - main dish.
Emeril Lagasses Spicy Sausage Dressing
When chef Emeril Lagasse spends years trying to "trying to replicate" his mothers dressing recipe and finally gives up and asks for it, you know it must be good. "It might be the best thing Ive ever eaten," he said. His version of stuffing uses Portuguese linguica or hot Italian sausage and milk-soaked bread. Sign us up.
Chef Michael Symons Brown Butter Mashed Potatoes
Mix potatoes with browned butter and crme frache and you have chef Michael Symons four-ingredient potatoesnbsp;that take the normal spud fare to a whole level of Thanksgiving yumminess.
Rachel Rays Brussel Sprouts with Bacon
As long as youre going to eat a meal packed with as many calories as youve had in the two weeks leading up to Thanksgiving, you might as well throw in some bacon. This Rachel Ray recipe also adds in a fall veggie: brussel sprouts. If you just crinkled your face up at the thought of eating brussel sprouts at all, let alone on Thanksgiving, trust us. Bacon makes ANTHING better. And it does amazing things to brussel sprouts.
Chef Robert Irvines Sweet Potato Bread Pudding
Save the marshmallows for roasting by the fire. This from chef Robert Irvine impresses in a whole new way. And, frankly, when the recommended toppings include caramel or bourbon sauce, were in.
Paula Deens Pumpkin Gooey Butter Cake
She had us at pumpkin. And gooey. This decadent southern desert uses boxed cake, so you know its easy, and it has Deens trademark butter party, so you know its good.
So which recipes are you going to try your hand at this Thanksgiving?
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A Guide To Creating A Profitable Rental Property
If youre looking to invest in residential real estate to rent out a property, there are many things you can do to contribute to its profitability. Some of them cost more than others, but keeping these things in mind when buying, renovating and decorating your property could make you a lot more money in the long run. Your priorities when it comes to the property will differ depending on your target market, yet these are pretty standard ways to help you get started
Before you jump into buying a property, it is essential that you research the area you are wanting to purchase a house in. You must consider potential deterrents such as high crime rates, loud areas and a generally messy environment. Equally, you should look out for selling points, such as good school districts, public transport and close amenities. The things that you prioritise will differ depending on your target audience, for example if you are wanting to target young professionals with a city flat, you would look out for public transport and amenities rather than good school districts. Decide who you want to attract to the property, consider what they would look for and research areas in depth accordingly.nbsp;
Make It Energy Efficient
Now that youve decided on a location, renovations are likely to begin. One thing that can dramatically increase the profitability of a rental property is if it is energy efficient. Prospective renters are sure to ask for the energy efficiency rating, perhaps because they are eco-friendly or more likely because they want to keep the cost of their bills to a minimum. Having double glazed windows, loft insulation and low pressure taps and shower heads will make a massive difference when it comes to the monthly cost of bills. The best thing to do is to upgrade the boiler to one that is A-rated, as heating accounts for about half of the average energy bill. Being able to tell potential renters about the implementation of various energy-saving elements during renovation will impress them. Best of all, your monthly yield will increase as you are able to charge more monthly rent for a property that will save the tenants money.nbsp;
Neutral Colour Palette
After any main renovations have taken place, you may start to consider decorating. There are no strict rules here, however in order to make your property as profitable as possible, it is advisable to keep the colour palette neutral. If the walls, floors and fixtures are mismatched throughout the house, it will completely put off most potential renters. So, going for cream walls and wooden floors throughout the house is your best option. When it comes to fixtures such as your bathroom suite and kitchen, keep things simple again. A white bathroom suite with grey tiles and cream kitchen cupboards with a wooden countertop is the best way to go. Not only will the property look bright and clean, but it will also enable your tenants to make the place feel like home as they can bring in their own sense of >
Not everyone decides to, but furnishing your property is a great option for many rental properties. Again, it is important to consider who you are targeting here. If you are wanting a family to rent the property, it is likely they will have already built up a collection of their own furniture. However, for city centre flats, opting for a furnished finish will be extremely popular. There is no need to buy designer furniture or expensive soft furnishings, you just need to buy items that complement the existing colour palette and look neat. Choose a colour scheme, either white or light wood works well, and choose furniture that all matches. Something as simple as having a dining table, tv stand and coffee table that all match can completely change the overall look of a room. Dont opt for a cream sofa, instead a mushroom brown sofa or soft grey will look great and will be easier to maintain.nbsp;
Considering the wants and needs of your potential renters should definitely not be an afterthought when it comes to buying a property. Instead, you should take time to consider what they might be looking for, and what they will find appealing, throughout the entire process. The smallest decisions could make your property much more profitable, so investing a bit more from the beginning is a good idea in order to increase your monthly yield.nbsp;
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Qualifying Income You Might Not Know About
Lenders want to make sure borrowers can comfortably repay their loans. Doing so allows the lender to make even more home loans. Affordability is primarily determined by comparing monthly income with monthly debt. Income is >
Either in the form of spousal support or child support, this type of income can be used to help qualify under certain guidelines. First, there needs to be a history of timely payment. This is accomplished by providing copies of bank statements showing the monthly deposits being made and when. It is also assumed spousal support will continue into the future barring the ex-spouse receiving the income has not married. Child support payments typically continue until the child turns 18. These conditions of who pays what and when as well as when and if the payments will cease are spelled out in the signed divorce decree.
Dividends and interest from investments may also be used to supplement qualifying income. The income must be shown to be consistent over the previous two years and the borrowers name must appear on the statement. Any other names on the statement will cause the lender to divide up the income among all who appear on the investment account. Income is averaged over the previous 24 months in order to arrive at a qualifying amount.nbsp;
When someone is injured while on the job, they may be eligible to file for disability payments. This can be verified by reviewing a copy of the disability policy benefit statement. This income may also be used as long as the lender makes the determination the income will likely continue well into the future, for a minimum of three years. It can sometimes be the case that the disability is shorter term in nature, or the lender needs more information about the nature of the disability filing. However, its important to note that individual doctors may be >
Social Security Income
This is fairly straightforward but social security income can also be used. In order for the lender to use social security income, all that is needed is a copy of the social security awards letter. A request for this letter is made directly to the Social Security Administration either by the borrower or the lender.
Like other forms of income, bonus income can be counted as long as there is a regular history of having received it. Bonus income should be both consistent and at regular intervals. Bonus income is averaged and should be paid monthly or sometimes quarterly. An annual bonus most often wont be used. Its thought that a holiday bonus in December may not be readily available in say July. Verification of the terms of the bonus can be obtained directly from the employer.
Part Time/Seasonal Income
With a two year history of receiving part time income as well as seasonal work such as during the holidays or during the summer, this income can also be counted when adding up qualifying income. The part time income should also be >
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What Might the Spring Housing Market Bring?
This year has been nonstop uncertainty. The coronavirus pandemic led to shutdowns and changes in everyones way of life. Thats continuing as we head into winter. Cities have been hard-hit not only in terms of public health but also economically.
There has been a move away from urban areas as many people are packing up to find homes with more space, less proximity to others, and perhaps more peace of mind.
Were also approaching a presidential election that could be potentially contested due to mail-in ballots.
Despite all of those factors, the housing market is one thing thats had a consistently rosy picture this year. So, what do experts think next year will bring? Will that positivity hold steady, or are we in for a bust?
If inventory remains low into early 2021, its possible that home prices could continue to go up. The median asking price for properties in September 2020, according to Realtor.com, was 350,000. That was up more than 11 compared to last year. Again, if there continues to be a lot of buyer competition and a significant shortage of properties, and little new inventory coming onto the market, this trend could maintain.
The inventory has declined 39 year-over-year. There was a quick burst of new listings in August, but then it went down again shortly after.
Suburbs Reign Supreme
While places like New York City have managed to consistently keep their COVID case numbers low since they suffered a massive outbreak in spring, it might not be enough to bring people back to it and other densely populated urban areas.
Some feel that 2021 could see more of an exodus from urban areas to suburbs.
Some of the most popular places in 2020 have included Colorado Springs, CO; Reynoldsburg, OH; and Rochester, NY. Certainly not the places you think of when you think of a bustling real estate market.
Despite all of the headwinds and the seeming barrage of negative information, it does seem that there is optimism among many. Consumer confidence was high in September, and builder sentiment similarly seems to be at an all-time high.
Could There Be Downsides?
While there are some indicators of positivity, there are also possible negatives that could come into play. One is the fact that the unemployment rate is still high. If there are more localized rolling lockdowns throughout the winter, that could go even higher. Some predict that foreclosures will rise in 2021.
Also, we might not have seen the worst of the unemployment yet. We dont really know. Some companies tried to avoid layoffs and they were using federal funding like SBA loans and PPP loans to keep their businesses afloat. Now, in the absence of a new stimulus deal to this point, we dont know if those businesses will have to succumb to financial pressure and start laying off employees.
Many are hopeful that following the election, whichever side wins will prioritize more government help and support going into 20201.
Some states have had moratoriums on rent as well, and that could lead to landlords being delinquent. This could be especially true in places like New York and possibly California.
When things are uncertain, or theres a high-anxiety environment, theres a tendency among consumers and would-be homebuyers to want to hoard their cash. Personal savings rates have gone up recently, surprisingly, but that means there may be less spending going on, particularly on bigger items like houses.
Finally, while there are some unnerving indicators, we do know with almost certainty that record-low mortgage rates will hold. The fed has signaled their intention to keep rates low for the foreseeable future.
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