How Does Financing Impact Cost of Ownership?  We’ve found that three items have the largest impact on the cost of ownership due to financing.

The most talked about are the amount financed and the rate.  For a moment, let’s talk about creating real equity while thinking like an investor. Payments are lower on 30 yr loans than 15 yr loans so most people choose the lowest payment.

How Does Financing Impact Cost of Ownership

What if you could afford the payment on a 15 year loan?  Would it make much of a difference?  If you look at the sample chart, a 30 year loan pays down about 25% of the original loan in 15 years compared to 100% on a 15 year loan.

How Does Financing Impact Cost of Ownership?

Let’s say you have a $250,000 loan at 4.125%.  The P&I (principal & Interest) portion on a 30 yr loan is $1,211.62  That same loan on a 15 yr is $1,864.92.  But wait, there’s more.  15 yr loans carry less interest rate.  Currently 15 yr loans are at 3.5% which brings the payment down to $1,787,21 That’s a $575.59 difference per month but the law of compounding saves you much more than that.

Over 15 years you’ll pay $575.59 more per month which equals $103,606.20.  However, if you finance for 30 years you’ll still owe $162,423.19.  That’s already a difference of $58,816.99.  This assumes you have the money to payoff the mortgage in 15 years.  If you don’t you’ll continue to finance it.  If you do this for the full 30 years you will have paid back the $250,000 original loan plus an additional $186, 184.76 in interest for a grand total of $436,184.76

Had you financed this for 15 years you would have paid back the original $250,000 plus $71,697.14 for a grand total of $321,697.14  That’s a lot less than $436,184.76.  In fact, it’s $114,487.62 less.

If you have the wherewithal to finance for less time you might wish to consider it.  If you’re disciplined you might consider taking out 30 yr loan and paying like it’s a 15 yr loan.  However, you will pay .625% more in the rate and it will require discipline.

The other two factors besides length of loan is the rate and the amount financed.  A good agent can help you with both.  Knowing which lender is best for you requires some knowledge.  Each borrower has a unique set of circumstances.  Some lenders offer better rates on FHA loans than others, while some lenders specialize in conventional loans.

We have lenders that offer bridge loans, construction loans, FHA, VA, USDA, bond programs, lot loans, portfolio loans, investor loans, and foreign national loans.  If all this sounds confusing to you, you need to work with an agent that can point you in the right direction.  Sometimes as agents we don’t know your full situation.  This is why we work with lenders we can trust so we can point you to the right program for you.

Knowing the right people and who you can trust makes all the difference.  An agent might negotiate a few thousand off the purchase price for you, but if you choose the wrong lender you can pay it all back and then some simply by choosing the wrong loan.

Most buyers focus on price of the home.  We like to look at total cost of ownership.  This includes price, rate, taxes, and other fees like HOA or condo fees, CDD’s, etc.  This way you can make a fully informed decision and make that dream home become a reality.  We hear stories where that dream home turned into a nightmare home because the buyer didn’t understand the full scope of the purchase.  We want you fully informed.

You can search the MLS like a pro at www.LeeCountyOnline.com  It’s the best property search website in SW Florida.  However, please talk to an agent on the Ellis Team before you purchase.  Not using us could cost you thousands.  Our agents offer peace of mind.  239-489-4042.

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Huge Opportunity to Sell After Hurricane Irma

Official SW Florida real estate statistics were just released for August and one thing that stands out to us is the drop in inventory.  This leads us to believe now is an excellent opportunity to sell SW Florida real estate after Hurricane Irma.

Inventory was falling pre-hurricane Irma.  We suspect some homes on the market were damaged. If 4,666 were on the market prior, and assuming 10% sustained damage, that would take us down to 4,200 homes.

Excellent Opportunity to Sell SW Florida Real Estate After Hurricane Irma Housing Inventory

Additionally, there are many displaced homeowners and renters in the Bonita, Buckingham, and San Carlos areas that need housing.  Flooding was an issue in these areas and some homes are uninhabitable.

Excellent Opportunity to Sell SW Florida Real Estate After Hurricane Irma

After Hurricane Charley in 2004 we saw an increase in home sales.  Buyers competed for properties because people needed housing.  The same scenario could very well play out in 2017.

Our phone has been ringing from buyers and investors looking to purchase.   We filter out the sharks that want to come in and buy up property for pennies on the dollar.  They are unrealistic and they do not care about people.  They seek opportunity.  Perhaps there will be opportunity for them with the flooded out and heavily damaged homes.

We focus on homeowners and investors who acknowledge there is a need for housing and are seeking solutions to meet that need.  If your home in uninhabitable, you need housing now.  They need a home that meets their needs, and they can’t be choosy if it has everything they’d want.

Some homeowners may decide they’ve had enough. Owning a 2nd home and preparing for storms can be tough, especially if they find they’re just not using and enjoying the home right now like they thought they would.  Circumstances change.  Other buyers are looking to purchase here because they’re at a point in their life where they will come down and enjoy the home.  Enjoying a 2nd home is a cycle, and depending where you are in that cycle makes all the difference whether it’s a good time to buy or sell.

Thinking of Selling?

If you own a home and you’re thinking of making a change, please call us at 239-489-4042.  Ask for Sande or Brett.  We’ll be glad to walk you through your options.  We can tell you how much we can sell your home for, and how much you would net at the closing table after paying off all mortgages and expenses.  Then you can decide if it makes sense to sell.  Or, you can see how much your home is worth online for free!

Selling is more fun when there is less competition from other sellers.  We have low inventory right now, and in about a month we’ll see if we lost more.  Demand probably just picked up as well, so a hurricane can be a perfect opportunity for home sellers, if they’re marketed properly.

Thinking of Buying?

If you’re a buyer, scoring a home right now can be tough.  There are several buyers looking for similar listings and not enough to go around.  You can call the Ellis Team and speak with our buyer specialists who are experts at making offers look more attractive than other competing offers to the seller.  This can be the difference between buying your 1st choice or settling for your 5th choice, if there even is a 5th choice.  Many times there are just a few homes that meet your needs on the market.

In a race against other buyers, speed wins.  I’d recommend searching at www.LeeCountyOnline.com  Our database has the entire MLS, and is updated every few minutes.  Don’t waste time using sites that don’t have accurate or timely data.  We get calls all the time from frustrated buyers who see something on a big website only to found out it was sold months ago.

Always call the Ellis Team at Keller Williams Realty Fort Myers & The Islands.  239-489-4042.  We’re here to help.

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We’ve seen a lot of scams and misinformation this past week so we thought we’d pass along some useful SW Florida real estate hurricane news and information.

SW Florida Real Estate Hurricane News and Information Rumor Control

If your property insurance was cancelled leading up to the hurricane, executive order 17-235 issued by Governor Scott provides that cancellation is now rescinded for 90 days.  Furthermore, all rates are frozen for 90 days, and the order allows policyholders 90 days to provide requested information from their insurance company.  In other words, this will give policyholders time to either renew or shop around for coverage in the wake of the storm.  Great job Governor Scott.

FEMA is available to assist people with housing and emergency needs.  From what we can gather, you must prove losses and damage and in some cases, show hardship.  It looks like they’ll issue credits off your tax return in some cases.  FEMA says it will provide some coverage that your insurance company may not.  It may be worthwhile applying at www.disasterassistance.gov  We did hear of somebody receiving $500 on the spot for their business.  FEMA will send out claims adjusters to view your damage.  This is especially helpful if your property has been flooded or is uninhabitable.  There is some housing assistance for those people.

There are rumors that FEMA, the Red Cross and FPL will reimburse you for lost food, but this turns out to not be true.

We’ve heard FEMA will not reimburse you for lost food on the news, and yet we’ve seen a checklist for you to itemize your food losses.

You hear so many things online and in the news and it’s difficult to know what’s true.  It’s especially difficult in times of disaster, limited power, internet, etc.  Beware of scams.

Mortgage Relief

Mortgage forbearance is a hot topic.  Across social media everyone is advising you to apply and the banks must automatically grant you 3 free months of no payments.  Let’s clear up a few things in this regard.  Lenders are forgiving and offering assistance.  If you have a government backed mortgage through FNMA or Freddie Mac you may be able to postpone payments up to 12 months.  FHA loans may extend up to 90 days.  In some cases, they will go longer depending on circumstances.

It’s best to contact your lender yourself.  Be wary of online scams.  There should not be a fee charged to you for this help.  If someone is charging a fee, this might be your first red flag.  These payments are not waived, they are tacked on to the end of the loan, so if you don’t need the assistance, it might be best to pass on the idea.

We’re seeing contractors going door to door looking for work.  Again, be wary.  If you pay them money upfront you may never see them again, and you always want to see their license and insurance.  God forbid they get hurt on your property, or claim they did.  You could be out some cold hard cash and have legal worries. Be wary of offers and possible strings attached.  Evaluate the source of the help.You don’t need permits for everything.  We’ve heard things like fence repair and replacement in a storm doesn’t need it.  Be sure to check for yourself before completing or hiring repairs.

Buyers Are Looking

The good news is we have buyers contacting us looking to purchase.  People up North haven’t given up on Florida either as they are signing up at www.LeeCountyOnline.com and searching for property. If you have a home to sell, we have buyers.

While we’ve been busy this week delivering generators to those in need, we’ve also been scurrying to fix damaged listings impacted by Irma.  We’ve secured contractors to repair and replace items so our sellers can be on their way and buyers can move into their new home.  Buying and selling real estate is more complicated than ever.  It’s wise to hire a professional to help you with all the details.

If you’re buying or selling and need a professional Realtor, please call the Ellis Team at Keller Williams Realty 239-489-4042.  We’re here to help.

More Resources:

Best Hurricane Irma Computer Model

FEMA Hurricane Irma Page

American Red Cross Hurricane Irma Page