Worth it or not Worth it?

Good article with short answers about common financial questions.

Jack Otter, Executive Editor of CBS Money Watch, tackles these issues in his book, Worth It… Not Worth It? In an easy-to-digest format, he sheds light on some of the most complicated personal finance decisions.

 1. Borrow for college or don’t go?

“As financially painful as college can be, not going to college is even worse,” Otter writes. So before you sign that loan, a better question might be: How much college can I afford? He suggests considering the earning potential in the student’s chosen field, and emphasizing quality of education over prestige. And if you do borrow, stick to subsidized loans.

2. Use a credit union or a bank?
“Credit unions can do just about everything a bank does, and in almost every instance, they will charge you less and pay you more,” says Otter. On average, credit unions charge lower fees on ATM withdrawals, lower rates on home equity loans and auto loans, and pay higher rates on savings accounts, CDs, and money markets.

3. Date a co-worker or date just about anyone else?

Otter emphasizes that when you’re first starting out, you just shouldn’t go there. There’s too much at stake. But if you’re over 30, it’s a safer bet to at least consider. After all, he says, he met his wife at the office and adds, “a relationship built on common professional interests can be a marvelous thing.”

4. Buy or rent a house?

If you’re ready to settle down, now’s a good time to buy.

5. Fixed rate or adjustable mortgage?
Go with a fixed rate mortgage. With rates this low, Otter says you should lock it in without looking back. “While rates probably won’t rise immediately, we’ve probably seen the lows. Locking in with a fixed rate now could be one of the best financial decisions you ever make.”

6. Buy or lease a car?

Buy a car. Otter’s take on leasing: It’s “like always going to the more expensive restaurant, or making sure you never, ever, pick up an item at the sale prices.” He says you’re essentially paying for the vehicle to depreciate. “To put it bluntly, most people who lease are paying lower monthly payments so they can drive a car they could otherwise not afford. And if they aren’t setting money aside, and insist on a new car every three years, they’re going to get stuck in a leasing cycle because their budget and lifestyle won’t allow them to ever afford to buy one.”
7. Hot mutual fund or a cheap fund?
“Here’s a secret that the financial industry really doesn’t want you to know: The cheaper the mutual fund, the better it is,” writes Otter. He says the lower a mutual fund’s fees are, the better your returns.

8. Cash-back or rewards credit cards?

Generally speaking, Otter says cash-back is the way to go – these cards usually pay back about 1 percent of your purchases. You’ll especially want to avoid rewards cards if you carry a balance. Rewards cards “charge higher interest rates, and you’ll pay far more in interest than you’ll ever get in rewards.”

9. Give kids allowance or pay for chores?

Should you give kids an allowance just for being your children, or have them earn the money through chores? Otter recommends giving a small allowance – between half and twice a child’s age in dollars. You can also consider dividing the allowance up into thirds: one for spending, one for saving, and one for charity. Then, pay for bigger chores – like weeding the garden.

The WOW factor

As we look back on 2012, we see a lot of similar patterns to previous years.

Sure, home prices have dropped. But if the home you are selling has dropped in price, then so has the home you want to buy. If you want to move on, you have to look at the whole picture. Also, consider if your next purchase is in an area that will probably be a better investment than where you are currently located.

Many buyers do not understand this.

It is not what you think your home is worth, it’s what the buyers think it is worth.

If you don’t agree with this, then you shouldn’t be selling your Home.

If you want top dollar and you want to sell your home within a couple months, then your home has to have some WOW factor to it. There is too much competition out there in this buyers market.

Top dollar is defined as the best possible price based on what similar homes have sold for, what buyers are willing to pay and what appraisers think it is worth.

We Sold over 60 homes this year, and the ones that got top dollar were the ones with the WOW factor.  The Homes that were missing this WOW factor, sold only if they were priced thousands and thousands of dollars less. If your home hasn’t been updated, you have to find a buyer willing to do the work, then the price has to be appealing enough for them to make it worth their while.

It may be very expensive to update your home in one shot. Most cannot afford to do this in a short period of time. The bottom line is you have to do some updating to your home every year, so when when you decide to sell, your home will be in WOW factor condition, with very little cost getting it ready for sale.

Ah, Arizona!

Ah, Arizona

The Devil wanted a place on Earth 

Sort of a Summer home

Then he gazed on his earthly kingdom

A place to spend his vacation

Whenever he wanted to roam.

 So he picked Arizona                                                                                                                                                                                                       A place both wretched & rough                                                                                                                                                                       Where climate was to his liking                                                                                                                                                                            And cowboys hard & tough 

He dried up the streams & canyons

And ordered no rain to fall

He dried up the lakes and valleys

Then baked & scorched it all

Then over his barren country

He transplanted shrubs from hell

The cactus, thistle & prickly pear

The climate suited them well

Now the home was much to his liking                                                                                                                                                                      But animal life he had none                                                                                                                                                                                         So he created crawling creatures                                                                                                                                                                     That all mankind would shun

 First he made the rattlesnake                                                                                                                                                                          With its forked poisonous tongue                                                                                                                                                            Taught it to strike & rattle                                                                                                                                                                                  And how to swallow its young

 Then he made scorpions & lizards                                                                                                                                                                And the ugly old horned toad                                                                                                                                                                               He placed spiders of every description                                                                                                                                                     Under rocks by the side of the road

Then he gazed on his earthly kingdom                                                                                                                                                                      As any creator would

He chuckled a little up his sleeve

And admitted it was good

Twas summer now & Satan lay

By a Prickly pear to rest

The sweat rolled off his swarthy brow

So he took off his coat & vest

“By golly,” he finally panted

“I did my job too well,”

“I’m going back where I came from,

Arizona is hotter than hell.”

How is the NW Indiana Real Estate Market Doing?

Q. How is the NW Indiana Real estate Market doing?

A.  The Indiana Real estate market has slowed down compared to a few years ago, but it still remains good. Homes that are in excellent condition with updates & priced in the    proper market range, are still commanding top dollar.   

New construction is the toughest competition that sellers will face.  Buyers love NEW, so keep your homes updated and your investment will be rewarded.

We offer complimentary Market evaluations. This evaluation would include what your home would most likely sell for in today’s market and what your NET Profit would be. We also provide our opinion of what you would need to do to get your home in top selling condition. We are also experts in the coordination of your sell with your new purchase.

Feel free to give us a call. Our office is right down the street in Schererville on Rt 30.

No one would know the local market better than a Local Real Estate Company.

Especially a company with the Power of our Name backing you!  Coldwell Banker !

Cathy & Jim Higgins, Real Estate Sales Team.   We Sold over 100 Homes the Past 2 Years, For a Reason! 

Cheap Security Measures

1. Don't Sleep Alone
If you're sleeping solo these days, take your car's remote control to bed with you. If you hear suspicious noises, push the remote's "panic" button and let the alarm scare away intruders.

2. Fake It

Pretend you're home watching "Downton Abbey" and deter burglars with FakeTV ($34), a small gizmo that glows and flashes like the flicker of a television set. FakeTV uses the same energy as a nightlight, and has a built-in light sensor and timer, which turns it on at dusk and off when you wish.

3. Slippery When Wet

In the U.K., they slather "anti-climb" paint, which never dries, on downspouts, gutters, and anything they don't want an intruder to shimmy up. It doesn't seem to be available in the U.S. yet. But it's a wild idea.

4. Footsteps in the Snow

Virgin snow is a sure sign that no one's home. If you're away after a snowstorm, ask a neighbor's kid to tromp around your yard, creating footprints that will fool a burglar into thinking you're around but just haven't gotten around to shoveling your snow yet.

5. Parked Car

Also, ask a neighbor to occasionally park their car in front of your house, making it look like you're entertaining visitors. And ask them to remove any fliers that may be wedged into your door or mailbox. Burglars sometimes case a home by planting a flier and checking to see if someone retrieves it.

Proposed Routes for the new Illiana Expressway

Proposed routes for the Illiana Expressway connecting Interstates I-55 and I-57 with I-65:

 

http://www.arcgis.com/apps/OnePane/basicviewer/index.html?appid=cd46d7351179458ebd20f4b4e5ce1538

We are about half way through 2012. How is the market doing compared to last year?
Based on our personal sales, Illinois & Indiana included, our sales are up 35%.
We feel our increase in sales is due to our thorough marketing on the Internet.
90% of the buyers look for homes on the Internet. With our variety of features such as Picture slide shows, Virtual tours, Video tours & interactive maps, statistics show our listings are getting more views. More views lead to increased sales. Plus, Coldwell banker spends big dollars to ensure your home is on every single major home search site, with all of our listings at the top of all search lists.

The seasonal slowdown occuring right at schools end has kicked in. We are expecting sales to increase significantly after the July 4th holiday. Last year, after the holiday, sales surged!

Based on data from the Multiple Listing Services, almost all towns In Illinois & Indiana, just West & East of the border experienced increased sales in 2012 compared to the same dates in 2011. But, all these Towns in Illinois have shown average Sales prices down. Remember, this includes foreclosures, so exact decreases are hard to measure.
Most towns in Indiana showed increases in Home prices in 2012 compared to 2011.
Just for comparison, Orland Park sales were also up, but average home prices were also down.   Orland park is always on the list of popular towns to live in.

With the economy improving, gas prices & interest rates low, and buyers wanting to buy homes at great prices, there is every reason to believe that Home sales will continue to increase.           Hopefully in the near future, this demand will not only cause a rise in home sales, but also a rise in Home values!

Q: I'm thinking of selling my home, and know my carpet, tile and other rooms need updating. Is it best to do it now or give an allowance on the selling price for these upgrades? The same with appliances?

A: Ahh, the age-old, existential question faced by buyers and sellers since time eternal: update or credit? There are dozens of ways to weigh the pros and cons of this dilemma. Some would have you do some complicated mathematical analyses to calculate whether the return on the investment is worth it, compared to the assumed incremental marketing power of offering your home at a lower price.

I, for one, think that addressing these sorts of questions mathematically is impossible to do without taking on a boatload of error-prone assumptions. That's because what does and doesn't work with buyers is not necessarily logical or calculable, nor are some of the other factors you should account for as you make this decision. My vote is that you should at least consider replacing some or all now, but only after you get input from your Realtor.

Here are the three primary factors underlying my recommendation:


1. If you're not yet 100 percent sure you're selling, replacing them now allows you to enjoy the upgrades. So many sellers, and I include my younger self, tend to make the upgrades and updates they've long dreamed of only when they're planning to move, missing out on the ability to enjoy the home in its best shape. And that's a shame. For that matter, it is not at all uncommon for home sellers to see their spruced-and-staged property and wonder why they decided to move in the first place!

In the interest of maximizing the enjoyment you get out of your home and your life now, you should at least consider updating these items if you can afford to, and enjoying them as long as you can before you do decide to sell the place, taking extra special care to live lightly on them in the interim.


2. Replacing them now might boost your home's chance of selling more than a price discount. When a home is in need of the updates you mention, it may -- simply put -- show poorly. And buyers simply like homes that look move-in-ready. Some won't even consider fixers, and I've even seen some die-hard amateur handypersons be tempted with the allure of a polished, freshly updated home (and the work-free weekends it promises).

If a few thousand dollars in basic updates and appliances makes the difference between your home showing like a fixer-upper and showing like a showplace, doing the updates before you list the place can be the difference between it selling or not -- period.


3. Replacing them yourself might be more cost-effective. Buyers almost always overestimate what things like carpet, paint and appliances will cost, so they might scoff at whatever you offer as too little, and request a bigger credit or discount than you had planned On the other hand, if you have the items replaced yourself, you can be as aggressive as you want to be in terms of shopping around, getting deals, doing the painting yourself, hitting up the appliance outlets or calling in favors with any vendors or contractors you or your agent might know.

If the work is done well and the outcome is beautiful, depending on your local market dynamics, putting a well-prepared, updated home on the market may even position you to get more than one offer (and a better price, to boot).

There's no one right answer to this question for every homeowner. Some may not have the money, or may be in a hot enough market that buyers bite on every listing. But my experience has led me to generally prefer putting a polished property on the market over a discounted cosmetic fixer every time.

Do as much updating as your budget allows while you own the home. You may wake up one morning and say, I am going to sell my home! You dont want the financial burden of getting your home ready for sale at the last minute. Remember, Sharp, Updated homes sell better than average, non- updated homes

10 Home Improvement Myths

Not all home improvements are created equal. Even in a seller’s market, it’s important that homeowners make the right investments that will yield higher returns. As you guide your clients toward a profitable sale, make sure you’re an expert on the top 10 home improvement myths so you can prevent your clients from believing them.

Top 10 Home Improvement Myths

1. Any remodeling project will add value to your home.
While many remodeling projects will add value to a home, some can be seen as a negative by future buyers. For instance, combining two smaller bedrooms to create one larger bedroom may better fit one homeowner’s lifestyle today, but it may cause the home to lose value in the eyes of a future buyer who needs the two separate rooms.
2. Buying the highest-quality materials attracts more buyers.
Installing high-end materials may seem like a wise decision, but it can backfire. For instance, using the most expensive tile in a bathroom may create an impressive appearance, but value-conscious buyers may opt for a more affordable home if the seller has over-improved compared to others in the neighborhood.
3. Adding square footage always adds value.
A better way to think about this statement is to insert the word useable into the sentence. Finished attics and basements – even if considered liveable by local standards – may not be attractive to a buyer if they are not finished to the same standards as the rest of the home.
4. Colors and textures – safe and simple is better.
Keeping a home “vanilla” so buyers can choose their own style and décor might be a safe bet, but it ignores the fact that most buyers just don’t have the ability to visualize the home differently. Without splashes of color and mixtures of texture, sellers can lose value to others that have taken the time to consult with an interior designer.
5. Inside improvements are better than outside improvements.
Not necessarily. If a home’s exterior has been neglected or doesn’t offer a good curb appeal, a buyer might stop there – and then the seller’s efforts on on the inside may not net them any more dollars. To get the biggest bang for their remodeling buck, sellers should start from the outside and work their way in.
6. Adding a bedroom is better than adding a bathroom.
It depends on the starting point. If a seller only has one or two bedrooms to start with, adding a bedroom before adding a second bath is probably a wise choice since most buyers are more attracted to three-bedroom homes. On the other hand, if the home already has three bedrooms and only one bath, the sellers’s next investment should probably be in a new bathroom.
7. Paint hides a multitude of sins.
Dry rot? Fungus damage? Mold problems? Carpenter ants? Termite issues? Nothing a can of paint can’t fix, right? Wrong! Not only does this practice violate disclosure laws in most states, it can set sellers up for liability after the sale, as most buyers will want the sellers to foot the bill for these hidden issues.
8. Converting a garage to living space is a great trade-off.
Nope. A garage conversion is almost always viewed negatively by future home buyers unless the sellers replace the lost garage with another parking and storage space of equal size.
9. Sellers can save money by doing improvements themselves.
For some homeowners, wiring a new lighting fixture or plumbing a new dishwasher is a no-brainer, but for others it may end up costing more later if they have to have the work redone by a professional. Another consideration is local and state laws regarding remodeling work: In many states if a buyer has purchased a home to remodel and resell, they must either hold a contractor’s license or hire a contractor to do the work for them.
10. Pools add value to your home.
This is only true in areas where pools are must-have amenities. In most areas of the country, pools have more limited appeal – and the idea of maintaining a pool for ten months out of the year when it can’t be enjoyed won’t appeal to most buyers.
Knowing these top home-improvement myths will allow you to help your seller clients choose the right remodeling projects. But don’t stop there. To keep your pulse on the amenities that are coveted most in your market, talk to local remodeling professionals, contractors, and home-improvement specialists on a regular basis.

A Good Joke for a Sunny Day

Your Duck is Dead--
A woman brought a very limp duck into a veterinary
surgeon. As she laid her pet on the table, the vet
pulled out his stethoscope and listened to the bird's
chest.

After a moment or two, the vet shook his head and
sadly said, "I'm sorry, your duck, Cuddles, has
passed away."

The distressed woman wailed, "Are you sure?"
"Yes, I am sure. Your duck is dead," replied the
vet.

"How can you be so sure?" she protested. "I mean
you haven't done any testing on him or anything.
He might just be in a coma or something."

The vet rolled his eyes, turned around and left the
room. He returned a few minutes later with a black
Labrador Retriever. As the duck's owner looked on
in amazement, the dog stood on his hind legs, put his
front paws on the examination table and sniffed the
duck from top to bottom. He then looked up at the
vet with sad eyes and shook his head.

The vet patted the dog on the head and took it out
of the room. A few minutes later he returned with
a cat. The cat jumped on the table and also delicately
sniffed the bird from head to foot. The cat sat back
on its haunches, shook its head, meowed softly and
strolled out of the room.

The vet looked at the woman and said, "I'm sorry,
but as I said, this is most definitely, 100% certifiably,
a dead duck."

The vet turned to his computer terminal, hit a few keys
and produced a bill, which he handed to the woman..
The duck's owner, still in shock, took the bill. "$150!"
she cried, "$150 just to tell me my duck is dead!"

The vet shrugged, "I'm sorry. If you had just taken my
word for it, the bill would have been $20, but with the
Lab Report and the Cat Scan, it's now $150."

How to Calculate How Much Home you can afford

A major cause of the recent housing crisis is the number of homeowners who ended up purchasing property and saddled with loans that, it turned out, they couldn't really afford. To avoid that trap, some key questions in determining how much home you can afford are: How much can you pay monthly? What are the financial requirements for different loans? What tools can you use for your mortgage search?The rule of thumb when it comes to home affordability is that most potential homebuyers should be able to pay for a home that costs between 2 and 2½ times their gross annual household income. So if a prospective homeowner earns $50,000 a year, he or she can probably afford a home that costs between $100,000 and $125,000.For those who can afford a big down payment, and have little or no debt, buying a home up to four times their annual income may be feasible.

Mortgage Lenders' RulesBut the most realistic way to assess the range of homes that you can afford is to look at your finances from a lender's perspective.Mortgage lenders use two main calculations to decide what you can afford: the front-end ratio and the back-end ratio. (They're not nearly as complicated as they might sound.)

The front-end ratio, also known as the housing expense ratio, is simply the percentage of your gross (that is, pretax) monthly income that will go toward paying the mortgage. Conservative lenders generally want that to be less than 28 percent, but some accept 30 percent or higher. If you earn $5,000 per month, and the lender has a 28 percent threshold, the most it'd likely be comfortable with would be $1,400 ($5,000 x 0.28).

The back-end ratio, or the debt-to-income ratio, is the percentage of your gross monthly income that will goes toward paying all debt obligations -- not just mortgage payments but credit cards, child support, car and student loans, etc. Many lenders want the back-end ratio to be lower than 36 percent, but some allow 40 percent or more. If you earn $5,000 per month and your monthly debt obligations are $300, or 6 percent of your gross monthly income, your back-end ratio will be 34 percent ($1,400 + $300). Since that's below the threshold of $1,800, or 36 percent ($5,000 x 0.28), you could have a good shot at qualifying for a loan.

Spring Market is Here

If you or anyone else has been thinking of Selling to Buy a New Home,
Now is the Time!
Interest Rates are Super Low and the Buyers (for now) are back!

A $200,000 mortgage, 30 Years at 4%, Monthly P&I= $954.00
A $150,000 mortgage, 30 years at 4%, Monthly P&I=$715.00

Pass the word along to your friends and Family.
Call us with any questions.

Clarifying That 3.8% Tax on Property Sales

From our Indiana Board of Realtors:

3.8% Medicare Tax:


The health care legislation enacted in 2013 included a new tax that
was designed to affect upper income taxpayers.
The 3.8% tax is imposed ONLY on
those with more than $200,000 of Adjusted Gross Income (AGI) ($250,000
on a joint return).

The tax applies to investment income, defined as interest,
dividends, capital gains and net rents. These items are all included in an
individual's AGI. A formula will determine what portion, if any, of these types
of investment income would be subject to the tax.

The tax is NOT a transfer tax on real estate sales and similar
transactions. Not long after the tax was enacted, erroneous and misleading
documents went viral on the Internet and created a great deal of
misunderstanding and made the tax into something far more draconian than the
actual provisions.

The new tax does NOT eliminate the benefits of the
$250,000/$500,000 exclusion on the sale of a principal residence. Thus, ONLY
that portion of a gain above those thresholds is included in AGI and could be
subject to the tax.

See AGI on tax form:
http://images.turbotax.intuit.com/iqcms/support/lib/images/e-file/2010-AGI-1040-GEN12049.png

What Can Really Affect Your Credit Score in a Bad Way

1) Opening Too Many Accounts at Once
Credit card sign-on bonuses are certainly enticing, but you
shouldn't be signing up for every card that's offering some cash back. This is
because each application and subsequent credit pull will generate a hard inquiry
that will appear on your creditreport.
2) Missing One Payment
One missed payment may seem innocuous enough, but in reality a
single delinquency can cost a previously stellar credit score to fall more than
100 points. The good news: As long as the missed
payment doesn't lead to additional woes, your score will start to rebound relatively quickly
and it can get back to good standing in about 12 months following the
delinquency
3) Closing an Old Account
You should think twice before officially closing that credit
card you opened back in college, especially if you're getting ready to apply for
a new line of credit. Closing an old account can have a negative impact on
yourcreditscore since it can lower your credit-to-debt utilization ratio, which is
essentially how much credit you have at your disposal versus how much credit you
are actually using
4) Maxing Out a Single Credit Card
As MainStreet has previously reported, it's never a good idea to
bump up against your overall creditlimit because your credit
utilization ratio will appear sky-high. However, maxing out a single card can
negatively influence your credit score as well.
5) Racking Up a Bill Right Before Your Statement
Closes
Credit card issuers typically only report two things to
creditbureaus each month: whether
you're up-to-date on all your payments and what your balance at the time is. As
such, running up big purchases right before your statement closes – and the
issuer reports the information – can negatively impact your credit-to-debt
utilization ratio and subsequent score, regardless of whether you go on to pay
off that balance on time or not.
6) Not Checking Your Credit Report
Even if you're not particularly credit active, it's a good idea
to take advantage of the free annual credit report the Fair Credit Reporting Act entitles you to, if
only to scour it for incorrectly attributed delinquencies, accounts or
inaccurate balances, which can all do varying amounts of damage to your score.
This is because errors on credit reports are all too common. As MainStreet has
previously reported, about 30% to 40% of all credit reports have some
type of error on them, some of which can unfortunately be difficult (and
time-consuming) to remove.
7) Ignoring an Account That Has Gone Into
Collections
You may think that you don't owe that unpaid medical bill that
keeps getting sent to your house, but your score is still in jeopardy if you
decide not to pay it. Many places that don't lend money, like a hospital or
cable company, will send their unpaid bills to a collections agency after a certain amount of
time and they will report you to the credit bureaus.
Similar to a missed mortgage, credit card or auto loan payment, this delinquency can cost good scores 100 points or
more.