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July 2015     

Is a Home Equity Line of Credit Right for you?

Chances are that at some time in your life you are going to need a little extra money. It might be that you are looking for a new car, adding a porch to your home, or financing your child's college education. Regardless of the reason, when a little extra money is needed we usually turn to our credit cards, a bank loan, or possibly tap into our retirement fund.

One other option that has become popular among homeowners is to secure a home equity line of credit (HELOC). A HELOC is a revolving credit line that allows you to borrow money using your home as collateral. The major benefit of a home equity line of credit is that, as the loan is secured by your home, you will be able to secure a better interest rate and there are certain tax benefits. On the other hand, the variable interest rate opens you up to interest rate fluctuation risks and failure to meet payments could result in the loss of your home.

The amount of the HELOC you are able to draw on will depend upon the appraised value of your home and the amount of equity that you have in your home. The lender will typically have a percentage of the appraised value which they offer (75-80 percent) and then will subtract the amount you still owe on the home, with the remainder being the amount you can draw upon.

Once you sign up for a HELOC you will be issued either checks or a credit card that will enable you to access the credit line. The major way this differs from a fixed loan is that you will be able to draw on the account as you need it and not draw on the account if your situation changes or the need goes away.

A HELOC is most beneficial when you are engaged in an ongoing project or have payments that you need to make (such as tuition payments). In this case the flexibility of the HELOC allows you to draw money as you need it and by using your home as collateral you will get a better rate than anything on the market.

Home Inspections are a Good Investment

Whether you are buying or selling a home, it's crucial to include a thorough home inspection as part of the process. It might be tempting to save a couple of dollars by passing on a home inspection, however this short sighted approach could end up costing you big time in repairs, such as leaky roof or an unsound foundation. Here are some other reason a home inspection is such a good investment:

  • Consumers can only see so much on pre-owned homes. A home inspection goes beyond the cosmetic to give buyers a clear look at what's behind the walls.
  • From a seller's standpoint, offering an inspection to potential buyers goes a long way to ensure peace of mind.

The bottom line is that a home inspection is one of the best financial investment consumers can make.

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Keeping your Landscaping in Style

Are you one of those people that are tired of trying to keep up with the current landscaping fads? It seems as if every couple of years the experts are telling us we need to redesign our landscaping or face the horrible designation of being "out of style".

Most of us do not have the time, money, or patience to try to keep up with the latest styles and fads. So instead of being subject to the whims of fashion, we need to develop a design that will remain timeless. Sticking to the basics and following the guidelines below will ensure that the design of your landscape is always in style.

  • Consider your house and your garden as integrally related living areas, not as "indoors" and "outdoors." With real estate prices soaring, it makes sense to capitalize on every square inch of land, whether indoors or out. Plan your outdoor space as a series of outdoor rooms, with all the niceties of an indoor one--light, privacy, and a sense of enclosure.
  • Break outdoor areas down into functions, and design around them. For example, your outdoor needs may range from an area for barbecuing and eating, to a child-friendly play area, to storage for garden tools. Lay these out exactly as you would a floor plan, with the proper relationships and, especially, the right solar orientation.
  • Be conscious of landscaping fads, and think twice before jumping on the bandwagon yourself. The barren, rock-strewn look was everywhere during the 60s. Clumsy, overbearing decks were a hallmark of the 70s, and during the 80s we were awash in wimpy-looking, quasi-Victorian gazebos.
  • Every era has its own plant fads as well. Still, you can never go wrong by sticking to your own preferences, whether they're currently fashionable or not.
  • Above all, remember to plan your garden in four dimensions, not three. Unlike a building, which can only decay over time, a garden is a living, breathing, and ever-renewing entity. It can change and mature in a way that buildings never can.
  • Therefore, pay special attention to how your design will develop and mature as the years pass. Give trees and planting plenty of room for growth over the years. And give yourself room for growth too, because your needs will change as well.

Existing-Home Sales Lose Momentum in April

Despite properties typically selling faster than at any time since July 2013, existing–home sales slowed in April but remained above an annual sales pace of five million for the second straight month, according to the National Association of Realtors®. All major regions except for the Midwest experienced sales declines in April.

Total existing-home sales, which are completed transactions that include single–family homes, townhomes, condominiums and co–ops, declined 3.3 percent to a seasonally adjusted annual rate of 5.04 million in April from an upwardly revised 5.21 million in March. Despite the monthly decline, sales have increased year–over–year for seven consecutive months and are still 6.1 percent above a year ago.

Lawrence Yun, NAR chief economist, says sales in April failed to keep pace with the robust gain seen in March. "April's setback is the result of lagging supply relative to demand and the upward pressure it's putting on prices," he said. "However, the overall data and feedback we're hearing from Realtors® continues to point to elevated levels of buying interest compared to a year ago. With low interest rates and job growth, more buyers will be encouraged to enter the market unless prices accelerate even higher in relation to incomes."

"Housing inventory declined from last year and supply in many markets is very tight, which in turn is leading to bidding wars, faster price growth and properties selling at a quicker pace," says Yun. "To put it in perspective, roughly 40 percent of properties sold last month went at or above asking price, the highest since NAR began tracking this monthly data in December 2012.

According to Freddie Mac, the average commitment rate for a 30–year, conventional, fixed–rate mortgage remained below 4.00 percent for the fifth straight month, falling in April to 3.67 percent from 3.77 percent in March.

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