Mortgage loans carry simple interest, and calculating how much of your monthly payment is credited to interest and how much of that payment is applied to principal, is really simple.
Suppose you borrow $150,000.00 to finance your new house. You apply for and get approved for a 30 year fixed rate mortgage at 4.25%. The monthly payment is $737.91.
To figure how much of your first month’s payment is applied to principal and how much to interest, multiply the loan amount of $150,000.00 by .0425 (4.25% interest), then divide that amount by 12 (12 months in a year). Out of your first month’s payment of $737.91, $531.25 goes to interest, and $206.66 is applied to reduce the principal.
Month two is calculated exactly the same, however in month two you only owe the bank $149,793.34 because of the first month’s principal reduction. So, $149,793.34 X .0425 = 6,366.22/12 = 530.52 – 737.91 = $207.39 to pay down more principal. That’s a little over a dollar more that is applied to the principal in just the second month. At that rate you’ll have the mortgage paid off in 30 years!
Seriously, by knowing how a loan works, you understand how even a small increase or decrease in interest rates can affect you.
When dealing in real estate, the more you know about the basics, the better you will be able to judge what is best for you and your family. You, as the buyer, deserve to have a sound grasp of the details in what usually is the biggest purchase you’ll ever make.
All the communities around Lake Tahoe have access to efficient, well-stocked grocery stores, but what could be more fun than buying your summer vegetables at an outdoor farmers market?
Instead of hearing canned music as you wander down aisle 4, out of doors your ears pick up the sound of the bold Stellar’s jays scolding anyone or anything in their way. In place of looking up to see what’s on top of that tall shelf over the frozen food section, out in the sunshine you can crane your neck to watch the birds swooping through the tops of the tall trees surrounding the market. Snapping fresh vegetable displays tempt your palate and delight your eye, while the sharp pine smell of the trees puts an edge to your appetite.
Indoor grocery stores have their place; we cannot do without them. Farmer’s markets, though, have food for the body and the soul.
Even though the outdoor markets have regular meeting places, it’s always wise to check. We’ve listed links to a few web sites that have the schedules (or soon will) for 2017. Bon Appétit!
It doesn’t matter whether it’s a house or a farm or a condo or a piece of undeveloped land that is being sold, nearly every real estate transaction needs the services of an appraiser who will give an unbiased professional opinion of the property’s value. Buyers do not want to overpay for a house, and an appraisal is especially important when a lender is involved. A good appraisal determines whether the purchase price is appropriate thus ensuring the lender’s collateral.
Qualified appraisers are required to be licensed or certified in all 50 states. They should be familiar with the local area, and must be impartial; they cannot have an interest in the transaction.
All appraisals are based on recent sales of like properties, as well as current market trends. The square footage of the house, number of bedrooms and bathrooms, the floor plan and the condition of the property all play a part in the final determination of the property’s value.
What happens if an appraisal is lower than expected? Of course, a second opinion by way of another appraisal is always an option. In some cases, an appeal to the original appraiser, giving new or missing information has been successful.
If everything goes smoothly, the appraisal is just another part of a real estate transaction. If the appraisal comes in lower than expected, an understanding of appraisers and their methods works in everyone’s favor so that buyers and sellers can cooperate to ensure the completion of their contract.
There has to be a neutral third party in every real estate transaction; someone who will take instructions only from the principals – the buyers and sellers. That is escrow’s job.
Once the contract is signed, and its terms and conditions, along with the buyers’ deposit, are submitted, the escrow officer begins her work. After depositing the buyers’ earnest money into a trust account, the escrow holder will prepare escrow instructions that are in accordance with the original real estate contract. This is the first document buyers and sellers sign. If, for some reason, the terms of the original contract change during the term of the contract, amended escrow instructions are sent for signature, also.
During the term of the escrow, the escrow holder must maintain an impartial third party status. They never will offer any advise, nor will they disclose or discuss the terms of the original contract with anyone except the parties to the contract. If a conflict arises before the close of escrow, the holder will not complete the escrow. An agreement must be reached before the escrow holder will proceed to closing.
A preliminary title report is ordered, which will show that the sellers really do own the property and are entitled to sell it, that the taxes on the property are paid current, and that there is a first mortgage, or the property is free and clear of liens. If there are liens against the property, perhaps a first or second mortgage or a mechanics lien, the escrow officer will order payoff amounts. These amounts will be paid by escrow from proceeds due to the sellers at closing. If the buyers are getting a first mortgage on the property, then it’s a waiting game until the lender is ready with the new loan documents.
Just before the agreed-upon date of close of escrow, buyers sign all the loan documents, deposit their total down payment into escrow, receive a preliminary closing statement, showing loan costs, prorated interest, escrow and title fees, along with prorated taxes and homeowner’s dues, if included in the original sales contract. Usually, sellers sign the only the deed, and receive a preliminary closing statement showing their costs of the transaction; escrow fees, commissions, payoffs, and prorated amounts, if any. Then it’s finally time to record the deed and the new first mortgage. Money is disbursed, escrow is closed.
You are in your new Tahoe house. Your real estate agent, Stacey Hanna, found the perfect fit for you and your family. Escrow went smoothly and closed on time. The furniture’s in, and the beds are made. Now what?
Luckily, you are in the stunning Tahoe Basin, where a day’s entertainment is always easy to find. In the summer, it’s hike, bike, swim, boat, and fish. Winters, it’s hike, ski, skate, and fish. After all that, if you long to hear live music, or sit and see a play, or enter Truckee’s bocce tournament, you can because Tahoe has something to entertain everyone in every season.
How about a play some summer’s evening? Probably the best-known venue is the Lake Tahoe Shakespeare Festival at beautiful Sand Harbor. It’s been delighting audiences for over 40 years. Whether you choose premium seating down front or the simple slingback chairs in the upper gallery, you’ll have trouble deciding where to look; the stage or the background of lake, mountains and stars.
Need to get up and dance after a hard winter? Then go to the popular late spring festival, WinterWonderGrass, in Olympic Valley. It’s a party for the whole family, and full of bluegrass music echoing off the mountains. Get your tickets early, though.
Northstar’s Beerfest & Bluegrass Festival happens in early July. Who wouldn’t love tasting a cold craft-brewed beer while listening to banjos and fiddles? To make it easy for attendees, there is a complimentary shuttle running from Kings Beach to Northstar and from Truckee to Northstar.
After all that toe-tapping, maybe you’re in the mood for something more dignified, like a little Mozart or Bach. Incline Village hosts a three-week celebration of music, Classical Tahoe, performed by visiting symphony orchestras and award-winning soloists.
Tired of buying tickets? Then head to Tahoe City on a Sunday afternoon for its free Concerts at Commons Beach. With the concert stage just a few feet off the water, you can even listen to the concerts from the comfort of your own boat.
For a more comprehensive list of activities, go to https://tahoe.com. The web site lists programs around Lake Tahoe, from South Lake to North Lake and everything in between.
That wonderful body of water, Lake Tahoe, needs more than good intentions to keep it clean, blue, clear and ours. We all agree on that. That’s where our formal organizations come in. They direct, we volunteer, and Tahoe benefits. So who’s doing the directing for Lake Tahoe?
In the 1960s some were seeing a city the size of San Francisco in the Tahoe Basin. Then, in 1969, the sight of freeways ringing the lake was avoided by the creation of the first bi-state regional environmental planning agency in the country. The TahoeRegional Planning Agency (trpa.org), a compact adopted by California and Nevada, ratified by Congress and signed by President Nixon, has had its detractors, but our Lake is still blue, clear and relatively un-crowded.
The League to Save Lake Tahoe, commonly known as Keep Tahoe Blue (keeptahoeblue.org), has been actively working since 1957 “to protect the public’s interest in a pristine lake, rather than acquiesce to short-term political, economic or private interests.” Keep Tahoe Blue looks for volunteers, donations and new members.
The California Tahoe Conservancy’s (tahoe.ca.gov) mission is to “restore and sustain a balance between the natural and the human environment, and between public and private uses at Lake Tahoe” since 1984. The Conservancy’s web site sets out what everyone can do to help sustain the Tahoe basin; everything from buying special license plates to simply picking up after your pet.
UC Davis Tahoe Environmental Research Center (terc.ucdavis.edu) researches Tahoe water quality, ecology and Tahoe’s watershed. It maintains six buoys and rafts on the Lake, along with six meteorological stations on watershed land surrounding Lake Tahoe. The Tahoe Science Center sponsors outreach and education programs for the public.
Tahoe Resource Conservation District (tahoercd.org) “is one of nearly 3,000 conservation districts across the country helping people to protect land, water, forests, wildlife, and related natural resources.” This organization sponsors volunteers and distributes publications about aquatic invasive species, landscape conservation, and stormwater monitoring.
There are more, of course, from small grassroots clubs to the giants like the U.S. Forest Service and the Nevada Department of Forestry, and California Forestry department. They all can use our help.
People thinking of buying property in Incline Village often ask what is IVGID, and what will it do for me?
The Incline Village General Improvement District has been serving the residents of Incline Village since 1961. It was organized to build water, sewer and road improvements for the developing community, although as soon as the roads were completed, IVGID dedicated them to Washoe County for maintenance.
Four years after IVGID was formed, building and maintaining community recreation facilities were added to its responsibilities. The District purchased Burnt Cedar Beach and Incline Beach in 1968, then acquired both golf courses and the ski area in 1976. The Recreation Center was completed and opened to the residents in 1992, and a skateboard park constructed in 2001.
Since then, the IVGID Board of Trustees has not been resting on its laurels. There has been building, renovation and upgrading of facilities throughout the District. The Championship Golf Course has been renovated, Diamond Peak has a high-speed quad chair lift, Snowflake Lodge was remodeled, a Skier Services Building has been added, a new building for the Chateau was built, the tennis facility has four new tennis courts, and Preston Field has been renovated.
Additionally, IVGID has the responsibility of meeting state and federal regulations for drinking water and effluent management. Treated effluent must be exported out of the Tahoe Basin, so maintaining the Effluent Export Pipeline that runs down into the IVGID wetlands in Douglas County is a part of IVGID’s job.
The Incline Village General Improvement District has also regularly upgraded the Burnt Cedar drinking water plant, most recently by adding ultraviolet disinfection, meeting the federally mandated compliance requirements. That job came in well under budget, and its completion was earlier than scheduled.
What can and does IVGID do for Incline Village residents? Plenty!
Do you want to own a second home in Tahoe? You may be thinking of a condominium or townhouse with shared common areas. Instead of individual owners worrying about snow removal, landscape and walkway maintenance, the condominium homeowner’s association steps in to lift some of that burden. A nice arrangement if you’re an out-of-town owner.
All HOAs, even those that are professionally managed, have boards that are made up of homeowners in the complex. The board members will schedule regular meetings so that owners can discuss major decisions and issues within their community. Additionally, all members usually vote on major expenditures. Along with maintaining the common areas, and collect the monthly dues, HOAs assure that members follow rules set out in the CC&Rs.
Each condominium owner has a copy of the CC&Rs for their community. Copies of the Covenants, Conditions, and Restrictions are usually given to buyers for their approval before escrow closes, and it is important that buyers read and understand all the CC&Rs for their community. Yes, most of the rules for most complexes are typical, however, a few CC&Rs go beyond the norm. If you enjoy a jungle-like entrance to your home and the CC&Rs prohibit certain plantings in front of your door, living in that condominium complex may not be for you. Likewise, if you own a matched set of St. Bernard dogs and the CC&Rs clearly state that all dogs in the complex must be less than 50 pounds, then you’d probably be better off somewhere else. Read and understand those CC&Rs.
A well-run HOA with reasonable CC&Rs will protect your investment and shoulder some of the routine home maintenance, giving you peace of mind and the time to come to Tahoe for play!
Most all of the real estate forecasting experts on the internet agree that there will be changes in the 2017 housing market, but few of those experts agree on exactly how and when the market will change.
Zillow’s Home Price Expectation Survey showed that over 100 economic and housing experts predict that housing prices will increase by 3.6 percent in 2017, down 1.2 percent from 2016 increase.
Some see higher interest rates for 2017, while others expect the new administration to ease some lending restrictions that could make getting a mortgage easier.
Svenja Gudell, chief economist for Zillow responding to questions from Moneywatch, feels that a labor shortage in the construction industry will result in higher wages, with the costs passed on to buyers. Additionally, the President-elect’s promise to deport immigrants, many of whom work construction, could make the labor shortage worse. But, Gudell points out, there are few details about the plans.
The Federal Reserve indicated that there would be three more interest rate increases in 2017. Jonathan Smoke, chief economist for Realtor.com observed to Moneywatch that buyers and sellers should act sooner rather than later, as rates will be higher and inventory will not improve as the year progresses.
Despite some disagreements over specifics, experts agree that home prices will rise, there will be more home sales, builders will be busier, and mortgage rates will increase.
Higher rates bring higher costs to homebuyers. If the interest rate goes to 4.5%, monthly mortgage payments could go up about $300 a month, while an increase to 5% would see payments rise by almost $500 a month.
It may turn out that in 2017, buying sooner rather than later will be the best strategy.
Mr. Shakespeare warned us “neither a borrower nor a lender be”, but these days most real estate buyers must be borrowers.
Applying for a real estate loan through bank or credit union has been the traditional way to obtain a home loan, and perhaps a homebuyer with a long, personal relationship with a direct lender might seem to have an advantage. Not so much now, with all the competition on the Internet
Loan brokers have multi-lender sources, and a good broker knows their products and can recommend the best lender for your needs. Additionally, if one lender declines your loan, for whatever reason, a loan broker can shop your application to another lender. There is rarely a need to fill out an application for each lender the loan broker represents.
The loan broker understands closing costs, insurance requirements, mortgage insurance, and the unexpected costs of obtaining a loan, all of which can affect the buyer’s application.
The best way to get your financing right is to meet face-to-face with an experienced, recommended mortgage broker. With all of a borrower’s financial information in hand the loan broker can pre-qualify and, in some cases pre-approve, a buyer, so that when the right home is found, it will be easier to obtain that mortgage.
Remember that not all loan brokers are good for all buyers. Be sure to get recommendations from friends, family, neighbors and, of course, your real estate agent to find that one loan broker who will help you get into your new home.