Kathy Kelley's Blog
10 Eliot Hill Rd, Natick, MA 01760
It's easy to think that investing in real estate is an incredibly expensive venture. You may think you need thousands if not tens of thousands saved before you can even think about it. But there are ways to jumpstart your portfolio even if you're renting one of the cheapest apartments in your neighborhood. Learn more about assumable mortgages and how you can use them to get ahead.
An assumable mortgage is one that's allowed to be transferred to another person. So if a property owner no longer wants to pay their mortgage, they have the option to put the property in someone else's name. You'll still need to qualify for the loan, and you'll need to go through the lender to work it out properly. Informal assumptions are liable to be canceled immediately (with the lender demanding full repayment on the loan).
You cannot assume all types of mortgages. As a general rule, insured loans, such as USDA, FHA, and VA loans, are assumable while conventional loans are not. In an assumable mortgage, the terms of the loan stay the same. A buyer won't have to worry about the interest rate or deadline changing. So a 15-year mortgage taken out three years ago gives you 12 years to pay it off.
Why Choose an Assumable Mortgage?
There are a few ways to get started in investing without saving for a large down payment, so it helps to understand the perks of each option before choosing one. The biggest advantage of an assumable mortgage is that you have the chance to lock in a property at a relatively low-interest rate. The closing costs are also more reasonable, given the strict limits on FHA, VA, and USDA fees for buyers.
Why Skip an Assumable Mortgage?
Assumable mortgages are not always recommended for buyers in rapidly exploding neighborhoods. This is because you're still paying the total value of the home at the time of sale. So let's say the property was originally sold for $100,000 two years ago and $20,000 has already been paid off, but the home is now worth $150,000. You'll still need to make up the difference in the home's value to complete the sale — which usually means taking out a second loan.
Assumable mortgages can be a great way to get started in real estate, but they're not for everyone. If you're shopping around for one, consult a real estate agent or financial advisor who can answer the nitty-gritty questions about how the loan works and what you can expect.
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It may be tempting to call an expert (and sometimes, you can't avoid doing so) to fix something or to enhance the decor of your home, but some projects are surprisingly easy to do. Tackling DIY projects at home has never been easier, thanks to the availability of tools and products designed just for homeowners. You won't have to pay contractor's rates -- and can have a custom look you'll love -- when you try one or more of these projects.
Upgrade your Shower: Get an immediate boost to your shower when you swap out the old shower head for something new. Removing the old head and adding a fancy new one -- whether you want something adjustable or a spa-worthy rain shower. You won't need many tools and can remove the old head, clean things up, then add the new one in about an hour. You'll love the satisfaction that comes from doing this yourself, and be able to buy a more expensive shower head without blowing your budget, too.
Paint a Room: Leave the cathedral ceilings and complicated spaces to a pro, but if you just need a quick color change in a bedroom, you can generally DIY it for about a quarter of the cost of hiring someone to do it. Expect to spend several hours over the course of the weekend and invest the savings into quality equipment and paint you'll never have to touch up or worry about.
Prepare the Garden: Shoveling out a 10x10 space sounds less than appealing to most of us, but you can rent a tiller from a local home improvement store and DIY this space in under an hour. You'll be able to focus instead on the planning and planting -- not the grueling digging -- when you take this approach. If you can push a lawnmower, you can use a tiller to prepare any area for planting in a hurry.
Assemble Furniture: You can hire someone to do it, or pay a fee for the store to assemble things, but if you have some spare time and a few tools, most items can go together very swiftly. Use the time to binge watch a new program and DIY the assembly. You'll save money and get the satisfaction that comes from knowing you can do things yourself.
Powerwash: There are many powerwasher brands on the market today that offer a lot of cleaning for a small price. A contractor could charge you hundreds of dollars each time you need the service, or you can spend about a hundred one time and get a unit of your own. These smaller, more compact models still pack plenty of punch and can be used for decks, porches, patios and on your home itself with ease.
Simple projects like these build your skills and your inventory of supplies and tools. If you have a project in mind that can be safely done, it is worth exploring your DIY options -- you could end up leanring something new and creating a finished look you'll love.