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Merry Christmas

by John Riggins

Let Your Tenants Send Your Kids to College.

by John Riggins

 

Let Your Tenants Send Your Kids to College

Most people have lots of things to save for but not always enough discretionary income after the family essentials have been met.

A relatively small investment in a rental home can control a good home that will easily rent, generate positive cash flows and pay for itself. The borrowed funds create leverage that earn a return on the total value of the home and not just the amount of cash you have invested.

The strategy is simple. Find a slightly below average priced home that will rent well. It will appeal to a larger group of people while it's rented and when it's ready to be sold.

Rent the home and maintain its condition over the years. As the loan amortizes and the value increases, the equity will grow. When your student is ready to start college, you'll actually have several options.

You can sell the property; pay the tax on the gain at the reduced capital gains rate and fund the education. Another option would be to refinance and take the proceeds to pay for the tuition. This would allow you to continue to own the asset but would free your equity and under current tax laws is a non-taxable event.

Regardless of whether you're trying to plan for your children's education or your own retirement, rental property offers many solid investment opportunities. Contact me if you want more information.

FHA TO COST BORROWERS MORE

by John Riggins

 

FHA to Cost Borrowers More

FHA has announced a major change to its loan program which allows borrowers to cancel the mortgage insurance premium (MIP) when their unpaid balance reaches 78% of the original purchase price. While no specific date has been set for the change, sometime in 2013, new FHA loans will require the mortgage insurance for the life of the loan.

At existing rates, the monthly MIP on a $168,875 mortgage is $178.99 per month. Under the current rule with normal amortization, the MIP would no longer be required in 9 years and 9 months. However, under the new rule, it would last for the entire 30 year term.

They also announced that the annual MIP will also be increased from 1.25% to 1.35% at some point in the near future. HUD, the parent agency for FHA, is making the changes to restore the capital reserves of the program that are needed to fund failed loans.

People that can close a FHA loan before the change takes place will fall under the old rules for canceling MIP and the lower rates. Since no date was announced, it is not known exactly when the changes will take effect.

While this information will probably not make the evening news, it will have a big impact on borrowers planning to use an FHA loan. Please pass it on to anyone you know who might be considering purchasing or refinancing with a FHA loan.

Displaying blog entries 1-3 of 3

Contact Information

Photo of John Riggins REALTOR RB11175 Real Estate
John Riggins REALTOR RB11175
John Riggins Real Estate
1003 Bishop Street, suite 2700
Honolulu HI 96813
808.523.7653
808.341.0737
Fax: 888.369.3210