Donahue Real Estate Company



Posted by Donahue Real Estate Company on 6/25/2018

Whether you call it a "rainy day fund" or a "financial cushion", having some money set aside for emergencies or unexpected expenses can help keep life on an even keel.

Although health insurance and a homeowners' policy can provide a measure of protection, insurance deductibles can take a large bite out of your bank account.

In addition to all the predictable expenses that accompany home ownership, mechanical systems like furnaces, hot water heaters, and air conditioning units have a way of breaking down at the most inopportune times. Another crisis that many people aren't prepared for is the potential loss of a job. When families don't have money set aside to weather the storm of an unplanned income loss, then there's no "safety net" to cushion the fall.

Strategies For Saving Money

The good news is that there are plenty of ways to build up financial reserves, but it often requires self discipline, a new set of habits, and the intention to make it happen. One of the first steps to putting some money aside for a rainy day is to open up a separate bank account. If you put extra money in your regular account -- or (even worse) keep it around the house -- chances are it will get spent pretty quickly. However, if it's deposited into a separate account that's designated for emergencies, unexpected household expenses, or even a college fund, then it'll stand a greater chance of being left alone until it's needed. Putting money aside does take some doing, but it can contribute to your family's financial security and ability to do things that are important to you.

If you have a tight budget, you're probably wondering where this extra money is going to come from! Sometimes, the very act of developing a written budget can provide you with clues and ideas for reducing your expenses. You'd also be amazed at how much the savings can add up when you comparison shop, buy in bulk, use coupons, negotiate lower interest charges on your credit cards, quit smoking, car pool to work, cut back on restaurant food, and make up your mind to live just a little more frugally.

Depending on how committed you are to creating a financial cushion, you could also make the fund grow faster by depositing a percentage of Christmas bonuses, tax refunds, manufacturer rebates, salary increases (raises), and other sources of extra income. Additional ways to beef up your financial safety net could include getting a part-time job, doing freelance work, holding a garage sale, or selling unwanted items through ads or flyers. When you pay off credit cards, car loans, or other debts, you could also redirect some or all of those monthly payments into your "future needs fund."

Whatever you decide to call it, it's nice to know that there's some extra money on hand for unexpected expenses, emergencies, potential job losses, college tuition, weddings, family vacations, home renovations, nursing home costs, or even retirement.






Posted by Donahue Real Estate Company on 6/18/2018

No homeowner wants to borrow more money. However, if you’re experiencing hard financial times or looking for a way to fund a home improvement project, there are ways to borrow money with your home as collateral.

In this article, we’re going to talk about home equity loans and home equity lines of credit (HELOC). We’ll explain how they differ and break down their benefits and risks.

Before the bubble

Before the financial crisis of 2007-2008, many homeowners were borrowing readily based on the equity of their home. Interest rates were low on home equity loans, encouraging homeowners to leverage their portion of homeownership.

During the recession, however, all of that changed. People owed more money on their mortgages than their homes were worth, and banks became reluctant to lend.

In recent, years, however, house prices have been creeping back up, and banks and homeowners alike have gained confidence in the equity of their home.

As a result, a growing number of homeowners are turning back to home equity loans and lines of credit as a source of low-interest financing.

So, what exactly are these loans and credit lines?

The difference between a home equity loan and a line of credit

A home equity loan is a lump sum of money that you borrow which is secured by the value of your home. Typically, home equity loans are borrowed at a fixed rate. Lenders take into consideration the amount of equity you have in your home, your credit history, and your verifiable income.

A home equity line of credit (HELOC) is a bit different. Like a credit card, you are able to borrow money as you need it via a credit card or checks. HELOCs often have variable interest rates, which means even if you’re approved for an initial low rate it could be increased. As a result, HELOCs are better suited for borrowers who can withstand a higher leverage of risk and variation each month.

Is now a good time to borrow?

If you’re a homeowner, there’s an understandable temptation to use the equity you’ve built over the years to your advantage. In some cases, home equity loans and HELOCs can earn you better interest rates than other forms of borrowing.

However, as with other loan types, it’s important for homeowners to realize that HELOCs and home equity loans are not the same as having cash in your savings account.

Another danger that borrowers face is the potential for foreclosure if things go badly. While most lenders won’t seek foreclosure after a few missed payments, your home has been put up as collateral for repaying the loan. Most lenders will choose to sell a defaulted loan to a collections company rather than seek foreclosure.

Ultimately, the best course of action is to avoid borrowing unless it will help you out financially in the long term. However, for those with high home equity who may, for one reason or another, need to borrow, a home equity loan or line of credit might be the best choice.





Posted by Donahue Real Estate Company on 6/11/2018

A first-time homebuyer may believe that he or she can submit a "lowball" offer on a residence, even if a house has been available for many weeks or months. However, the risks associated with submitting a subpar proposal are significant, particularly for a homebuyer who wants to purchase a top-notch residence as soon as possible.

Ultimately, a lowball offer may result in an instant "No" from a home seller. Perhaps even worse, the proposal could sour potential negotiations between a homebuyer and home seller and cause a property buyer to miss out on an opportunity to acquire his or her dream residence.

When it comes to buying a house for the first time, there is no need to risk submitting a lowball offer.

Now, let's take a look at three tips to help a first-time homebuyer avoid the temptation to make a lowball proposal.

1. Evaluate a Wide Range of Houses

An informed first-time homebuyer may be better equipped than others to provide a competitive offer to purchase his or her ideal residence.

For example, a homebuyer who assesses a broad range of houses in a particular area can determine a price range for similar residences. Then, if this homebuyer would like to submit an offer on a house, he or she can use housing market data to submit a fair proposal without delay.

With housing market data, a homebuyer can determine whether he or she is operating in a buyer's or seller's market too. That way, this homebuyer can leverage housing market insights to quickly and effortlessly put together a competitive offer on any residence, at any time.

2. Understand Your Finances

Getting pre-approved for a mortgage usually is a great idea for a first-time homebuyer. With a mortgage in hand, this homebuyer will be able map out a homebuying journey based on his or her finances.

To receive pre-approval for a mortgage, a homebuyer will should meet with several banks and credit unions. These lenders can offer details about a variety of mortgage options and help a homebuyer make an informed mortgage decision.

After a homebuyer is pre-approved for a mortgage, he or she can submit an offer on a house and understand exactly how much money is available for a home purchase. As a result, this homebuyer can put his or her best foot forward with an initial offer, thereby reducing the risk of submitting a lowball proposal.

3. Collaborate with a Real Estate Agent

The homebuying journey can be long and complicated, especially for those who are pursuing a house for the first time. Fortunately, a first-time homebuyer can collaborate with a real estate agent to obtain deep housing market insights.

A real estate agent is happy to provide honest, unbiased home offer recommendations. By doing so, this housing market professional can help a first-time homebuyer submit the best offer on a residence – without exception.

Ready to purchase a home for the first time? Use the aforementioned tips, and a first-time homebuyer can avoid the danger of submitting a lowball offer on a residence.




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Posted by Donahue Real Estate Company on 6/4/2018

If you’re a first-time homebuyer, you might be wondering what all of the expenses you can expect to have when it comes time to close on your home.

Ideally, you’ll want to understand all of the closing costs months in advance so that you can plan accordingly. However, even if you’re close to purchasing your first home, it’s still useful to get to know closing costs better.

In today’s post, I’m going to cover the closing costs that are typically the buyer’s responsibility.

Buyer’s closing costs

There’s good news and bad news when it comes to closing costs for buyers. The bad news is that buyers are typically on the hook for the majority of the closing costs associated with a real estate transaction. The good news, however, is that many of these fees will be grouped together as part of your mortgage, meaning you won’t have to devote much time or thought to them individually.

That being said, to ensure that you know where your money is going, here’s a breakdown of the main closing costs that you’ll likely be responsible for as a buyer:

1. Attorney fees

Real estate attorneys research the ownership of the home, ensuring that the seller actually has the right to sell you the property. Though this is usually a formality, it is an important one.

Attorneys can either charge a flat fee or hourly rate.

2. Origination fees

The origination fee is paid upfront to the lender. It’s the fee that they charge for processing your mortgage application and getting you approved as a borrower.

3. Prepaid interest

Many buyers pay their first month’s interest in advance. This is the amount of interest that will accrue from the time you purchase the home until your first mortgage payment is due (a month later).

4. Home inspection

Inspections are one of the closing costs that can save you a ton of money in the long run if they find anything during their visit to the home. Inspectors should be licensed in your state, and you should choose your own inspector based on ratings and reviews (not at the recommendation of someone who is incentivized to sell you the home such).

5. Escrow deposits

Escrow deposits are typically shared between the buyer and seller and it is the fee that escrow agents charge for their services. You can think of an escrow as a neutral third party that keeps your money safe while purchasing a home.

6. Recording fees

All real estate purchases have to be recorded by the local government. Typically, this is performed by the county or town hall. Recording fees are charged whenever a real estate transaction occurs.

7. Underwriting fees

Mortgages are all about determining risk. A lender wants to know whether they will see a return on their investment by lending to you. To do so, they research your credit and income history. The fee the charge for this work is called the underwriting fee.




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Posted by Donahue Real Estate Company on 5/28/2018

When you’re buying a home, there’s a lot of excitement that surrounds the search and purchase of the property. In the process of buying a home, however, there are many things that buyers forget to take into account during their search and budgeting. Below, you’ll find some information to help you be prepared as a buyer to consider your home purchase from all angles without missing a beat.  


The Expense Of Closing Costs


Remember that closing costs will be somewhere in the 3-5 percent range of the purchase price of a home. Amidst all of your savings, you’ll need to consider this a part of your expenses. Closing costs need to be paid upfront in most cases. You can roll your closing costs into the financing, but it depends on the circumstances. There are no guarantees that the lender will agree to it. Your realtor can also sometimes negotiate for the sellers to pay the closing costs, but in a seller’s market this is quite rare. Be prepared with your closing costs and understand how much you’ll need to spend so that you have an appropriate amount for the downpayment and the other expenses that you’ll incur during the process of buying a home.  


The Cost Of Maintaining A House


Many buyers forget about all of the costs that they will need to pay for after they finish buying the house. In addition to a monthly mortgage payment, you’ll need to pay for things like utilities, routine home maintenance, furnishings, and more. If you completely deplete your savings for the purchase of the home, there’s not a whole lot of wiggle room for you to pay for additional needs in the house. 


The Cost Of Furnishing And Decorating A Home


You may move into a home with a few pieces that you have previously owned. You could also need a lot of things from a bed to a sofa. All of these items can add up. You may even have to worry about little things like window shades, curtains, lamps, light bulbs, and more. 


Home Repairs Can Cost A Pretty Penny


If something needs to be done in your home, the repairs can cost you quite a bit. If you’re not paying attention during the home inspection, you’ll be in for some surprises. That’s why you need a good realtor to help you through the process. A new roof can cost thousands of dollars. New appliances are an expense you should plan for. Other major work that needs to be done around the house can also dip into your savings significantly. As a buyer, you need to be prepared for any of these expected or completely unexpected costs.           




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