Listing Courtesy of RE/MAX REALTY GROUP REHOBOTH
Something new is stirring in the ordinarily hidebound world of residential mortgage offerings: a new way of approaching the financing of home purchases. If successful, it might well shift the way some Rehoboth Beach mortgage contracts are written.
The experiment is known as the "Wealth Building Home Loan," and it addresses a home-ownership problem that has been talked about for a long time, with little being done to solve it. The issue in question is how to unburden new homeowners from spending years in a situation that bears more resemblance, financially, to renting than to owning— especially during the first 3 to 5 years. For low- and moderate-income mortgagees, that’s the difference between sinking into more debt and actually building wealth. After all, every dollar that goes toward interest is lost, while dollars that pay down principal are investments.
According to Edward Pinto, one of the authors of the WBHL, often during the opening years of a 30-year loan, "68% goes to pay interest." In the new program, 77% of monthly payments go to pay off principal—with the result that in a short time, new homeowners have a much larger equity stake in their homes. And, it is hoped, a sizeable increase in pride of ownership: "a stake in the game."
It sounds good, but you might be wondering how this could be possible. Is this just a ‘pie in the sky,’ feel-good idea that will never see daylight in the real world? Apparently not. The pilot program is being put into action by some serious players: the American Enterprise Institute (if that sounds like a conservative outfit, it is) and administered by the Neighborhood Assistance Corporation of America (if that sounds like a liberal outfit, ditto). And it’s being funded by Bank of America and Citi Mortgage—neither of which would be likely to bankroll some fly-by-night scheme.
The mechanics of this kind of mortgage work out like this. First, it’s based on a 15-year term, which of course speeds the rate at which equity builds; and second, it’s a mortgage that carries a very low interest rate. Something for nothing? Not quite: the concept is to
· change the underwriting standards to tilt away from credit history and toward recent payment history and residual income, thought to lower lender risk
· eliminate the down payment altogether, instead allocating that initial cash toward "points": buy-downs of the mortgage’s interest rate to .5%, (or even 0%)!
It boils down to an approach that could be a win-win. Borrowers (even those who suffered credit black marks during the economic downturn) could be newly eligible for a home loan, and because lenders pocket the interest rate buy-down amount, a proposition they might find acceptable.
Should Rehoboth Beach mortgage applicants expect this deal to be available next week? Not likely: it’s in the pilot phase. But if it seems to work out, it could be a shot in the arm for homeowners who can manage a slightly higher monthly payment. If you would like to chat about today’s home loan availability (or any other current Rehoboth Beach real estate doings), I hope you’ll give me a call!
There is something about spring that gets everybody at least thinking about fixing up the house, and it’s that time of year again. Throughout the length and breadth of Rehoboth Beach, home décor decisions are being pondered. Ambitious landscaping and fix-up plans are being laid, budgets drawn, and troops assembled (the troops will be armed with paint brushes and rollers, hedge clippers and rakes).
Perhaps it’s the weather; perhaps the angle of the sun—or maybe even last Sunday’s clock-adjusting exercise—for whatever the reason, this time of year is when we look around the house and decide changes will be made!!
It’s also the time of year when occasional disagreements between Sussex County’s husbands and wives have been known to crop up. The Home Improvement section of the realtor® web site just ran a feature titled “When Couples Disagree About Home Décor,” which promised to tell who the winner is in such arguments. It pointed out that women have different priorities than men (women: “leather makes those embarrassing noises each time you sit or stand” vs. men: “but you’re going to freak out each time someone sits on [the linen cushions] with a drink”). The woman who wrote the article says that she won the argument—but admits that now she freaks out every time someone sits on her sofa with a drink (it’s already freckled with water marks). So maybe the man won in the long run…
If your home décor efforts are getting special attention this season because you plan to add your home to the Rehoboth Beach listings, “what’s hot” might suddenly be more of a consideration. But a different home décor impasse can come about when the fashion zeitgeist points in one direction while your personal taste pulls in another. Even worse, you may find that the fashion world is arguing amongst themselves!
The Realty Skinny says, for instance, that gray is about to overtake white in popularity (simultaneously also “pushing out the beige era”). That’s not a problem for The Washington Post, whichagrees that “gray makes all your possessions pop out” (except, I have to believe, the gray ones).On the other hand, the Pantone Color Institute, which practically wrote the book on color, couldn’t disagree more. They think that pinkish Rose Quartz (“warm, embracing”) and faintly bluish Serenity (“calm-inducing”) are what’s happening right now. In fact, it/they are its Color[/s] of the Year. That is because “the pairing…brings a feeling of calm and relaxation into the home environment.” That would be welcome—especially when you’re freaked out about the water marks on the sofa.
You don’t have to be selling your home for home décor tweaks and garden renewal to occupy your thoughts, but if you do, I hope you will give me a call. My free, no-obligation consultation will let you in on the latest Rehoboth Beach market information. I think you’ll agree that knowing exactly what’s happening has a definite serenity-producing effect! Call/Text me Russell Stucki at (302) 228-7871, email me at email@example.com, visit more listings at www.beachrealestatemarket.com.