Dogs Rule.the House

What happens to my mortgage payment if Interest Rates Rise?

If you wait to buy a Home for any reason, you stand the chance of interest rates rising. We do not have the economy for interest rates to fall, so I doubt that will happen.

Say you would be financing a $200,000 mortgage for 30 years.  You were quoted a 4.5% interest rate. 
Your Monthly Principal & Interest Payment would be: $1013.
Over 10 years you would have paid approx $82,000 in interest.

But, you wait a year, interest rates rise to 5.5%.
Your Monthly Principal & Interest Payment would now be: $1135.

Over 10 years you would have paid approx $101,000 in interest.

This guy created a problem!

Question: I am in the final stage of purchasing property. As a part of my purchase agreement, I inserted a contingency that the appraised value of the home must meet or exceed the selling price. The appraisal came in $14,000 less than the selling price, giving me the right to re-negotiate or to rescind the purchase agreement.

At this point, I allowed the seller to obtain a second appraisal of the property. The second appraisal came in at almost exactly the asking price. This $15,000 difference in appraisal on this property has me both concerned and confused. How do I determine which appraisal is correct?

Answer: You had an appraisal contingency in your purchase offer. It allowed you to back-out of the transaction in the event of a low appraisal. There was a low appraisal. Now the question is this: If you could buy the property how much would you pay? Either the seller will accept your revised offer or not. Be aware that the lender will only finance the transaction on the basis of the sale price or the appraisal, whichever is lower.

As to the two appraisals, you only needed one as required by your offer.  Not sure why you allowed a 2^nd appraisal? The second valuation has muddled the issues.

Food for Thought

What Defines a Bedroom?

Question:   We have a bedroom in our basement. The appraiser said it is not a bedroom and our home appraised at less than sale price. How could they say it is not a bedroom when we have beds in there and our sons slept there for 13 years? We are furious!

Answer:  We understand your frustration. You have a nice home, both parties agreed to the sale price, you made it through the home inspection and everyone is happy. Then the appraiser steps in and ruins this perfect deal.

Although your home obviously has a bedroom in the basement, it does not meet the bedroom criteria that an appraiser uses. This may vary from state to state, but generally a bedroom is considered a bedroom by an appraiser if it has 2 ways of egress (door and/or window). The bedroom must be at least 70 sq. ft, and it cannot be smaller than 7 ft in any horizontal direction. Sorry, that 2’ x 35’ room is not a bedroom. The escape window or door must be at least 5.7 sq. ft for an opening.                                                                                                                                                                                        But guess what? It doesn’t need a closet according to the appraiser! 

                                                                                                                                  NOTE: It would be a good idea to put at least an armoire in that bedroom to satisfy your buyer.

The Conclusion: It may look like a bedroom, it may have a bed like a bedroom and you sleep in it like a bedroom, but according to the appraiser, it doesn’t quack like a bedroom.

Regular, Daylight & Walkout Basements

Question: We went looking at new construction models and were given several basement options. We are used to just one kind of basement. What’s the difference?

Answer: Remember when a basement was a basement?  Where creepy crawlers, high humidity and low light were common. The place where all unwanted things were stored because we didn’t want to dump them. Where shadows appeared ominous and the light bulbs were always burned out. The place where we always worried would seep water during a rain storm. These types are called standard basements. That's all changed with the new basement designs.

Even if a basement is not finished at the time of the build, an additional lower level gives a homeowner options of expanding their living space in the future. This expanded living space can really bring a home to life.

Walkout basements have lots that are heavily sloped, but allow a home's lower level to feel very similar to the other levels in the home.  With full windows that brighten up the lower level and full access to the backyard, many home owners enjoy a home built on a walkout lot.  Almost any type of home can be built on a walkout lot, but considering the importance of the lower level in a ranch home, many home buyers prefer walkout lots when specifically building a ranch. One disadvantage to a home built on a walkout lot is that although you can access the backyard from the basement, the main level's backyard access is raised into the air and requires stairs to access the yard.

Daylight basements provide a balance between walkout and standard basements.  Homes that feature a daylight design can be built on a variety of land elevations.  With full windows in the basement, home owners can use a lower level with a bit more creativity.  Although the added light increases the visibility from a lower level basement, if your home is built on a daylight lot, the deck and backyard access from the main level will require stairs and railings to get from an elevated deck down into the yard.  Many home owners say the added light in the lower level and the way daylight windows can make a lower level feel more like other levels in the home, is worth the increased cost and having a raised deck.  With somewhat of the best of both worlds, daylight lots are great for almost any type of home. 

Always Worth Reading

THE MOST BEAUTIFUL FLOWER

The park bench was deserted as I sat down to read,

Beneath the long, straggly branches of an old willow tree.

Disillusioned by life with good reason to frown,

For the world was intent on dragging me down.

And if that weren't enough to ruin my day.

A young boy approached me, all tired from play.

He stood right before me with his head tilted down

And said with excitement, "Look what I've found!"

In his hand was a flower, and what a pitiful sight,

With its petals all worn - not enough rain, or too little light.

Wanting him to take his dead flower and go off to play,

I faked a small smile and then shifted away.

But instead of retreating he sat by my side.

He placed the flower to his nose and declared with surprise,

"It sure smells pretty & it's beautiful, too.

That's why I picked it; here it's for you."

The weed before me was dying or dead.

Not vibrant of colors, orange or red.

But I knew I must take it, or he might never leave.

So I reached for the flower, and replied,  "Just what I need."

But instead of placing the flower in my hand,

He held it mid-air without reason or plan.

It was then that I noticed for the very first time,

That weed toting boy was very much blind.

I heard my voice quiver, tears shown like the sun,

As I thanked him for picking the very best one.

"You're welcome," he smiled, and then ran off to play,

Unaware of the impact he'd had on my day.

I sat there and wondered how he managed to see

A  self- pitying man beneath an old willow tree.

How did he know of my self- indulged plight?

Perhaps from his heart, he'd been blessed with true sight.

Through the eyes of a blind child, at last I could see,

The problem was not with the world; the problem was me.

I then held that flower up to my nose,

And breathed in the fragrance of a beautiful rose.

And smiled as I watched that young boy, another weed he held high,

About to change the life of another passerby…..