So I’m eager to join the nearly 40% of American landlords who actually own their homes outright. Can you imagine that? When the bank doesn’t own your home and you step onto your lawn, the grass feels different under your feet—that’s called freedom.

But the problem is you’re currently stuck dragging around that ball and chain called a mortgage—just like most homeowners.

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Don’t worry. We’ll show you how to pay off your mortgage faster so you can finally join the ranks of debt-free homeowners. Let’s get started.

3 Ways To Pay Off Mortgage Early

I explore some smart ways to shave interest – and years – off to repay the mortgage early.

Increase My Regular Repayment Amount

Paying more than my required repayment amount is another way to reach my homeownership goal earlier.

Example

John intends to contribute an additional $386 per month on top of his $2,315 monthly home loan repayment, paying $2,701 each month. Over the course of 12 months, he pays $32,412, which is roughly equivalent to two additional months’ worth of payments per year.

This will shave six years off John’s 25-year loan term as well as around $80,000 in interest.

• Original home loan repayment: $27,780/yr x 25 years (@ 4.9% p.a.) = $694,500
• Revised home loan repayment: $32,412/yr x 19 years (@ 4.9% p.a.) = $614,948*

Make additional lump sum payments

It’s feasible to make additional lump sum payments – especially during the early years of my mortgage. It can have a profound effect on how much my total home loan repayments will be and the length of time to own my property outright.

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Example

Tim’s required monthly repayment amount is $2,485 on a $400,000 loan with a loan term of 25 years. Over the term of the loan she’ll pay a total of $29,820 in one year ($2,485 x 12), and over 25 years, Tim will pay $745,500.

Five years into the loan, Tim receives an inheritance of $70,000. Dividing the money, she puts $40,000 into her mortgage and $30,000 into her bank account.

Making the lump sum repayment of $40,000 means that instead of paying off her mortgage after 25 years, he will reduce the loan term by more than three years – assuming her repayments remain the same – and save herself more than $70,000 in interest. The redraw balance will also slowly reduce in line with the loan term.

Set up a mortgage offset account

A mortgage offset account enables me to offset, or reduce, the interest charged on my mortgage by letting me pay down the principal loan amount with my savings.

Say if I have a mortgage balance of $400,000, and I put $20,000 into an offset account. By doing this, I’ll only need to pay interest on a balance of $380,000 ($400,000 – $20,000) rather than $400,000.

The more money I have in an offset account, up to the balance of the loan, the larger the savings and the earlier the mortgage can be paid off.

Planning to Refinance Your Mortgage?

If you intend to refinance to a mortgage you can pay off quickly, talk to your friends at Illinois Brokers Academy. Our most-recognized real estate classes show you the true cost—and savings—of each loan option. They coach you to make the best decision based on your budget and goals so get in touch with our representatives right away!

If I’m shifting out of my home and my home is vacant for some time. Then, it’s crucial for me to take the required security measures to keep it protected. Unless somebody shifts in and starts residing in it.

Why? Everybody seems to know the answer to the WHY question here. Of course, an empty home tends to be vulnerable to theft and vandalism for a prolonged period of time.

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Tips For Vacant Home Protection

Until I find the proper buyers or right renters for the place I’m shifting out of. I’ll need to make sure my vacant home stays protected and secure against thieves and other intruders. So, here are the top ways to protect my vacant home when I’m shifting.

• Maintain the exterior. I should not let my property look neglected.I’ll make arrangements to have my lawn mowed, or in winter, my driveway shoveled. I’ve to trim branches that can fall and damage my roof during a storm.Also,I’ll wipe out the clogged gutters to prevent water damage. The functionality of exterior lights should also be checked.
• Take precautions with the interior. I will install working deadbolts on exterior doors, and make sure all the windows are securely locked.Further, I’ll set my thermostat at a constant temperature (high enough in winter to avoid freezing) and replace the thermostat’s battery.Also,I’ll seal up pet doors to keep out pests, animals and other prospective intruders.
• Boost the vacant home security. Its better to add motion-sensor lights and entry alarms.I’ll keep bushes trimmed to remove prospective hiding places for burglars.Also,it is good to close the curtains and blinds to avoid people from seeing in.Trimers are good for for lights, and I’ll consider to add a unit that simulates a flickering TV to dissuade criminals.
• Round up support. Enlist neighbors or friends for additional vacant home protection. I have to ask them to alert me of any concerns and occasionally park in the driveway to assist make my place seem occupied. Notify the police and the fire department that the house will be empty, and I’ll also leave my phone number with them.
• Protect the investment. I have to be aware that if my home is vacant for a month or more, my homeowners insurance may not cover losses that occur while it’s vacant.

To best protect my vacant home, I’ve to layer the best security. If you create a security system that consists of the 6 components I addressed today, you will be well on your way to moving a theft or vandalism down the block. These kinds of losses at vacant homes aren’t inevitable; it just requires minimal effort and consistent monitoring by me or my property manager to protect my vacant home.

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I may not intend to care for my rental space as I would do of my own house, but there is a bundle of reasons to be a good tenant. In addition, to keep my landlord happy, taking care of the rental gives me the upper hand in rent negotiations. Maybe, I can get better lease terms too. I’ll also save money if I’m not evicted. Also, if I don’t have to forfeit my security deposit.

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How Can I Be Good Tenant?

I’ll treat my rental property with the utmost care with these tips for the long, first time, and to be a good tenant:

Know your lease. Before I move in, I’ll brush up on what’s in the lease so I don’t inadvertently violate the terms. Can I take my pets along with me to my building? Can I hang pictures on the walls? If I want to do something that’s is not permissible, I’ll speak to my landlord. He may let me — especially if I have proved to be a good tenant.

Keep it tidy. Tenants who keep their rental spaces neat are sending a significant message to their landlords: ‘I respect your property.’ And you’ll most likely get your security deposit back when I shift out. If I have pets, make sure to vacuum at least once a week, pick up any accidents right away and keep my house odor-free.

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Get insured. While it’s my landlord’s duty to take care of the building and grounds. Yet, the landlord will not protect the contents in my rental space. That’s where renters insurance comes in. For an easy affordable premium, renters insurance assists me to replace broken items or stolen items inside my rental property.

Use a storage unit. If I don’t have access to a storage area in my house or apartment, I can store my extra possessions in a storage unit.

Doing these things will assist ensure to enjoy my stay and put myself in a good position if and when I need assistance. These tips to be a good tenant can assist me to avoid some of the common problems tenants can encounter.

What are your best tips for being a courteous and conscientious tenant?

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New homebuyers can easily watch the amount of paperwork they own grow after purchasing a house. From a folder full of closing documents to piles, the pages are added up once a home purchase is completed.

The inclination may be to keep everything. After all, I’ve just completed the largest purchase of my life. Also, all of those closing documents must have some purpose to keep around, right?

Do you really need to keep the original documents? Along with certified papers and photocopies that make up the closing paperwork? The closing documents, however, will come from the closing broker, lawyer, or escrow officer. It includes financial and legal documents; most of the documents from my real estate broker will be about contract negotiations.

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What Closing Documents I Need To Keep?

Purchasing a house always needs assembling a range of documents, from pay stubs to tax returns, and then signing even more as I process the mortgage and purchase.

But once I’ve completed my transaction and have shifted in and settled, do I know which closing documents I need to protect — and how long do I need to save it? Here are 4 closing documents tips to spot on once I have closed my house purchasing process:

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Keep…for atleast one year

• Utility bills: At the end of the calendar year and once I’ve matched actual expenses to those that appear on my bank or credit card statements, I can toss utility bills.

Keep…indefinitely

• Home improvement purchases and receipts: I may not intend on selling out my house anytime soon, but it is better to keep proof of purchases and upgrades I make, like adding new appliances or fresh drywall. They’re supportive to demonstrate appreciated value to potential buyers.
• Insurance policies: I will save these vital documents in a safe spot so I can easily access account numbers and coverage limits, as well as agent contacts, at any time.
• Mortgage documents: I’ll keep mortgage paperwork I get when I buy my house.Even if I pay off my mortgage, I’ll get a release or certificate of satisfaction;I’ll keep that, too.

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Keep…until I sell out my house

• Closing documents: I will retain a copy of any document signed during my house’s closing as a backup. This may include the purchase agreement, addendums, disclosures and repair requests, escrow information, inspection reports, and a closing statement. Some professionals suggest to keep this collection of forms for several years after I eventually sell out the house, too.
• Abstract, title, appraisals, and deed: I should retain it for my own record, which outlines things such as legal boundaries and the history of the house.

Keep…until it expires

• Home warranties: Again, save in a secure location that I’ll remember so I have access to coverage and limitations.

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Other Vital Tips

There are some other vital factors one should consider after house closing which are given below.

• Where to keep necessary documents: You should stash them in a fire-safe box in your place or in a safety deposit box.
• What to do with documents that are OK to toss: Shred them; home office shredders are cost-effective and widely available.

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There are two kinds of mortgages, fixed-rate and adjustable-rate mortgage (ARM). Every mortgage kind has its highs and lows.

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What is a Fixed Mortgage?

A fixed mortgage has an interest rate that remains the same for good. Fixed mortgages are the most common kind of financing because they provide predictability and stability — I’ll never be surprised by the principal and interest charges in my monthly mortgage payment because they’ll stay the same for the entire loan term.

Fixed rate mortgage highs and lows

• High: This loan kind has predictable payments that may allow for smoother budgeting.
• Low: The loan seems to be easy to understand and may be feasible for first-time buyers.
• Low: I may pay more interest over the life of the loan.
• Con: I have to refinance to get a lesser interest rate, which can be expensive.

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What is an Adjustable Mortgage?

Commonly referred to as an ARM, rates and monthly payments remain the same for a set period of time, then evolve periodically. For example, a 5/1 ARM locks in the rate for the first five years, then the rate will fluctuate once per year. The rate will either increase or decrease depending on rate trends in the US.

Adjustable Mortgages Highs and Lows

• High: The initial interest rate may be lesser than on fixed rate mortgages.
• Lows: The loan can be customized to individual borrowers.
•  Interest rate on the loan may increase substantially.
• Loan could seem more difficult than a fixed mortgage.
• Loan payment may change so I may not have fixed monthly payment amounts.
• I may be have to pay more interest over the life of the loan, depending on how adjustable rates change over time.

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I hope you have a better understanding of which option to go for a fixed mortgage or an adjustable mortgage. Additionally, which mortgage calculator do you use specifically? Would you like to share with the IBA family?

Ah, the joys of having a basement to my home. It might offer me an extra space to transform into a family room or guest bedroom. It also gives the correct amount of square footage to use for short- and long-term storage. But to store in the basement doesn’t always make for glad home partners.

Some basements — prone to floods,moisture-related mold, even an insect or two — may not be the exceptional place to pile up all the excess and seasonal stuff. Focus on the ideas to determine what not to store in the basement.

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What I should Not Store in The Basement?

Electrical Appliances

Stashing gadgets I might use in the future. Such as an old gaming system. If I’ve any empty space, electric items such as power drills or kitchen stand mixers are better in the basement. If my basement is full, I’ll make sure that any TVs or other electronics are in a moisture-free space.

Artwork

 Still, thinking about what to do with that painting I purchased on a whim? I will surely not store in the basement. Humidity and poor ventilation can affect delicate paintings, pictures, and other items. Lots of DIY materials like paint and other home supplies — think extra propane tanks — pose a fire risk, specifically if opposite to gas-powered appliances. I will undoubtedly follow manufacturer suggestions for storage.

Book and Documents

Bad ventilation and humidity can wreak havoc on anything with a paper component. Unless the basement space is full and not subject to big climate variations, I should save books above ground and in sturdy, leak-proof containers. I will save hard-to-replace documents in the upper part of the basement in a locked firebox.

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How to store things in a damp basement?

If my basement gets damp, I will Invest in mold-proof storage containers to store things. Especially the things that might attract moisture. In addition to the tips above:

Clothes

I prefer to store in the basement the extra or seasonal clothing in sealed containers, if possible.

Furniture

Any fabric or foam pieces, such as cushions, should be tidy and stored on the basement floor.

Furthermore, I’ll keep a small donation bin in the basement to collect things that are ready to repurpose. When the bin is full, I’ll take it to a donation drop-off point. Also, after cleaning up and reorganizing my basement, I’d take time to review what’s in my garage storage and under the sink.

Would you like to tell what things do you like to store in your basement?

Sound like something you might enjoy? Then, you should explore more about real estate education to help you become the most demanded real estate broker. Click here and choose your real estate courses and then don’t look back!

Sound like something you might enjoy? Then, you should explore more about real estate education to help you become the most demanded real estate broker. Click here and choose your real estate courses and then don’t look back!

What a Home Appraisal Actually is?

Great question! A home appraisal is a procedure in which a licensed appraiser conducts a thorough inspection of a property to analyze its true value (which isn’t always the same as the market price). The appraiser will then compile all of the findings into a report and produce the home’s appraised value.

If a purchaser is financing their purchase with a loan, the borrower will generally handle ordering the appraisal. This is done to ensure that the borrower is not over-borrowing or borrowing more money than the property is worth. As such, some borrowers may actually need purchasers to include an appraisal contingency in their offers.

What is a Home Inspection?

In the procedure of closing a house sale, the purchaser usually hires a home inspector to come to visit the house and perform a visual observation. In accordance with the state’s standards, the home inspector points outs health, safety, or major mechanical problems.

Tim Buell, the president of the American Society of Home Inspectors, comments “We look for things that are substantially deficient, unsafe, near the end of the service life, or not functioning properly.”

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Home inspection vs. home appraisal

Mortgage borrowers will need a proper home appraisal to analyze the worth of the home I’m purchasing. A real estate appraisal is a chunk of the borrowing process just like checking out my credit score or debt-to-income ratio.

But this appraisal will not reveal particular details about the condition of the house. A house appraisal will be more concerned with the house’s location, size, and general condition.

Unlike a home inspector, the appraiser will not crawl around in the basement or climb onto the roof searching for issues.

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Purchasing a home and need help?

Since you’re reading this article, you are probably interested in purchasing a home. If you need advice, a rate quote, or any other service, get in touch with us right away to request personalized help for my house purchasing buying goals.

Home buying contingencies are a common occurrence in property transactions. They fairly indicate the selling and purchasing of a house will only occur if they meet the specific conditions. The offer is given and accepted, but either party can bow out if those conditions aren’t met. Most people perceive home buying contingencies as being tied to financial concerns. A purchaser can give an offer, but it is contingent upon them receiving a mortgage. Actually, there are at least three common home buying contingencies and financial contingencies aren’t the most prevalent.

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Most Compelling Home-Buying Contingencies

Let’s work through the three most common buying contingencies and how buyers can ensure their offer to be on to the top.

Mortgage contingency

A mortgage contingency gives me an out if I don’t qualify for a house loan. Unless I’m purchasing a house with cash, a mortgage contingency is mandatory. Even if I get a preapproval for a mortgage. Preapproval is essential, but it’s not an absolute guarantee. After a house is under contract, my house loan will go through a final stage of underwriting.

Appraisal contingency

When a home appraises for low than the offer amount, my financing may fall through, or I may have to pay more money down to purchase the property. A property appraisal contingency will let me back out if the appraisal comes in less.

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Home sale contingency

Under a house sale contingency, my offer is subject to the successful sale of my current house. The contingency is most often based on a particular time period  — usually 30 to 60 days — after which the contract gets forfeited.

In a seller’s market, including this contingency puts my offer at a serious downside because sellers have a bundle of offers from which to select. All other things being equal, a seller is more likely to choose an offer without this stipulation.

Which home buying contingency do you think is most influential?

When purchasing a house, it is compulsory to include specific conditions in an offer. However, it is also essential for purchasers to limit the number of contingencies and time period to make their offer captivating to a seller. If a purchaser only requires 7 days to inspect a house they shouldn’t put 15 days in their offer. Now, they might be able to draw out a contingency period in a purchasers’ market. But in a hot seller’s market, they require to be shortened and in a few cases, even removed. This is where an exceptional realtor comes into play. They are aware of the market conditions and will be able to suggest exceptional terms.

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Having a strong debt-to-income ratio can assist a person get approved. Having a weak debt-to-income ratio can be the key difference between approval and denial for a house loan.

The portion of calculating the ratio is rather simple. Understanding what is included, and what is not included in the calculation, requires a bit more work.

I’ll take out time to understand how this ratio works and what I can do to bolster my chances of getting approved for a house mortgage.

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How To Calculate Debt-to-Income Ratio

Here’s a simple two-step formula for calculating my DTI ratio.

1. Add up all of my monthly debts. These payments may include:
   • Monthly mortgage or rent payment.
   • Minimum credit card payments.
   • Auto, student or personal loan payments.
   • Monthly alimony or child support payments.
   • Any other debt payments that show on my credit report.
2. Divide the sum of monthly debts by monthly gross income (the take-home pay before taxes and other monthly deductions).
3. Transform the figure into a percentage and that is the DTI ratio.

Keep in mind the other monthly bills and financial obligations. Such as utilities, groceries, insurance premiums, healthcare expenses, daycare, etc. are not part of this formula calculation. My borrower isn’t surely going to factor these budget items into his decision on how much money to lend me. Keep in mind that just because I qualify for a $300,000 mortgage, that doesn’t indicate I can actually afford the monthly payment that comes with it when considering my entire budget.

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Why DTI Ratio Matters?

While there is no definite law establishing a definitive debt-to-income ratio that needs borrowers to take a loan, there are some generally accepted standards, especially as it regards federal home loans.

Let’s understand it from an example if I qualify for a VA loan, Department of Veteran Affairs guidelines recommend a maximum 41% debt-to-income ratio.FHA loans allow for a ratio of 43%. It is possible to get a VA or FHA loan with a greater ratio, but only when there are a few compensating factors.

The ratio required for conventional loans differs, depending on the borrowing institution. Most banks rely on the 43% fact for debt-to-income, but it could be as great as 50%, depending on factors like income and credit card debt. Bigger lenders, with big assets, are more likely to accept consumers with a greater income-to-debt ratio, but only if they have a personal relationship with the client or believe their income is enough to cover all debts.

Remember, evidence shows that the greater the ratio, the more likely the lender is going to have issues paying.

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According to you, what’s an ideal debt-to-income score?

Even if I’m not selling my house – not even thinking of selling – this information is a keeper!

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For the rest of the story, read ahead!

Capital Gain Tax Defined

Are you aware of how real estate capital gain tax work when selling out a house? Selling my house can bring me a significant return. But what does the tax guru have to say about it?

With real estate values across the country skyrocketing, now more than ever, it is essential to understand capital gain tax on the sale of a house.

The rules have evolved over the years when it comes to the tax on property, so it is substantial to know it now.

By the time you’ve done reading, you’ll have a much better grip on understanding the real estate tax.

Let’s take a deep dive into everything you need to know.

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Ways to Reduce Capital Gain Tax

Usually, the tax I’ve to pay when selling out a property runs in lakhs. However, I can significantly reduce capital gain tax by using one of the following methods:

Invest for the long term

If I manage to explore great companies and hold their stock for the long term, I will pay the lowest rate of capital gain tax. Of course, this is simpler said than done. A business’s fortunes can evolve over the years, and there are many reasons I might want or need to sell out earlier than I originally anticipated.

Invest in Capital Gain Accounts Scheme

Purchasing a brand new residential property may take much longer. I have to find a preferred home/apartment that I like to buy, negotiate with the seller, and complete the documentation – all of which is definitely time-consuming.

Investing in capital gains accounts gives me temporary relief. I will consider this as parking my capital gain tax safely for the time being, while I scout for a brand new property. I will invest in the capital gains I obtained by selling out a property in a public sector bank or other banks approved by the capital gains account scheme of 1988.

Use capital losses to offset gains

If I experience an investment loss, I can take leverage of it by decreasing the tax on my gains on other investments. Say my own two stocks, one of which is worth 10% more than I paid for it, while the other is worth 5% less. If I sell out both stocks, the loss on the one would reduce the capital gain tax I’dowe on the other. Obviously, it is a perfect situation, all of my investments would appreciate it, but losses do also incur, and this is one way to get some advantage from them.

If I have a capital loss that’s higher than my capital gain, I can use up to $3,000 of it to offset ordinary income for the year. After that, I can carry over the loss to future tax years until it gets exhausted.

Do you know some more innovative ways to avoid capital gain tax?

Understanding the real estate capital gain tax is paramount. Otherwise, I could end up costing myself piles of money when selling out a house. Nobody is owed to pay more income taxes than they have to.

If you have any queries on the tax laws, take out the time to speak with a qualified accountant or tax specialist. I’ll be glad if you do so.

Hopefully, you now have a clear understanding of how real estate capital gain tax works.

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