Listing Courtesy of LONG AND FOSTER-BETHANY
When you first go shopping for an Ocean View home, loan budgeting—figuring out how much a comfortable monthly mortgage payment would be—pretty much dictates the price range you will be considering. Some listings do the lion’s share of the home loan budgeting work for you through a ‘payment options’ box that provides a thumbnail mortgage payment calculation. You enter a percentage for the down payment, amount, and the type of loan—and at the speed of light it calculates an estimate for the monthly payment. Those that also include the latest property tax bill and an insurance estimate come up with a pretty definite picture of how affordable a given property will be.
An associated cost that home loan budgeting alone doesn’t address is the additional operating cost every homeowner runs into—the maintenance figure. Since those costs are dependent on the type and condition of the property, most experts just advise future homeowners to anticipate 1% of the purchase price per year…a transparently made up number. There are a couple of approaches that can improve on it.
The first way is to invest in a home warranty, which has a set cost. Home warranties are the forms of insurance that cover the repair or replacement of covered items. This can be a relatively economical way new Ocean View homeowners can buy some budgetary peace of mind while familiarizing themselves with the ins and outs of their new Ocean View home. But it’s also an occasion where it’s particularly important to read the fine print—the only way to be clear on what is covered, what is not, and what the deductibles are. It’s also important to get an idea of who the subcontractors will be.
The other way to get a bead on likely future maintenance outlays is to anticipate likely major replacement costs. Wood shake roofs, for instance, should last about 30 years, while fiber cement shingles last five years less (and rough weather conditions can lop years off those life expectancies). Wood floors last a century, as can marble and slate—while carpet usually needs to be replaced every eight to 10 years.
When it comes to included appliances, most Ocean View homeowners will agree that today’s models just don’t seem to last as long as they used to. It may be because electronics have added improved functionality…or it may be a result of flimsier manufacturing. At any rate, the National Association of Homebuilders’ research tells us that dryers (both gas and electric) have average life expectancies of 13 years—as do cooktops, electric ranges, and fridges. Washing machines last an average of 10 years; while microwave ovens last 9 years—as do dishwashers and compact refrigerators. Freezers last 11 years, garbage disposals, 12…but (uh-oh!) trash compactors average only 6. If the previous owner can furnish original warranties or purchase slips, it should be able to come up with a ballpark idea of when to expect replacement outlays.
Home loan budgeting will deliver the all-important mortgage payment amount, but it’s prudent to leave ample some budget for the other inevitable expenses. But first things first—and calling me is a good way to start. Finding a Ocean View home to fit all your requirements (including the budgetary ones) is, after all, job One! Call/Text me Russell Stucki at (302) 228-7871, email me at email@example.com, visit more listings at www.beachrealestatemarket.com.
It can be a true three-ring circus as you close in on signing day for your new Milford home. Sometimes there’s a near-simultaneous sale of the previous house that demands attention. There are the timing issues connected with moving out and then moving in. You may be dealing with furnishing the new house, school schedules, and sometimes work requirements have to be juggled; and everything seems to be happening at the same time.
Amidst all the details you are attending to, there is one that appears so simple that it may not get as much consideration as it deserves. Seeming almost like a non-decision, this one actually has major implications. It’s a true ‘sleeper.’
The subject is your decision on how you want to time the new mortgage payments for your new Sussex County home. It turns out that "once a month" is not necessarily the best answer.
Many lenders offer a variety of mortgage payment options, and they vary in ways that can make a surprisingly great financial difference over the long haul. No matter how busy you get, this is a decision which deserves some serious attention (and probably a hand calculator).
First, there is an English language oddity to straighten out: it’s about the prefix "bi."
If you think "bi" is a prefix that means ‘two,’ you’re right—but it also has two meanings:
1. ‘Bimonthly’ means twice a month (but not once every two months).
2. ‘Biweekly’ means every other week.
At first glance, "every other week" and "twice a month" seem to be the same thing; but they’re not. The difference is significant, because there are 52 (not 48) weeks in a year. As everyone comes to realize sooner or later, there are 4.3 weeks in an average month (not four). So the number of mortgage payments you will make could be 12 (if you go with the standard ‘once a month’ mortgage payment), or 24 (a bimonthly mortgage payment), or 26 (the biweekly choice).
Most people who choose either of the ‘bi’ payment choices consider a mortgage payment amount that’s exactly half of the monthly amount. If you choose the bimonthly plan, you might save a bit on interest by paying the first half a little bit early. But most lenders just hold the money and apply both payments at the end of the month—if so, the advantage disappears.
The real significant difference arises if you are offered a biweekly option. You can use any of the online mortgage sites to work out the precise details for yourself. Because you are making two extra payments a year, for instance, what would have been a 3.8% 30-year $225,000 loan for an Sussex County home actually turns into a 26-year loan. All else being equal, you’d own your Milford home free and clear four years earlier—and save more than $23,000 in the process!
No matter how hectic a house hunting and moving process becomes, it’s part of my job to help my clients keep the important details and decisions front-and-center. Getting the best answer to the mortgage payment choice is one of them; and of course, another best answer is to give me a call!