Sunrise Homes & Renovations, Inc.

Understanding ‘PITI’ and What Goes in to Your Monthly Payments

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Understanding 'PITI' and What Goes in to Your Monthly PaymentsAsk any friend or family member that owns a home and they will share that it takes a bit of management to keep all the expenses under control. Let’s explore the concept of PITI and why it is vital to have a clear picture of how much your home is costing you each month.

Just What Is PITI, Anyway?

PITI is an acronym that stands for “principal, interest, taxes and insurance,” which are the four main components that make up your housing costs.

Principal – this is the amount that you are paying against the total amount that you borrowed when you purchased the home. For example, if you used a mortgage to cover $200,000 of the home’s purchase price, the remaining balance of that $200,000 is the principal. A part of your monthly mortgage payment goes to paying down the principal.

Interest – this is the extra cost that the lender charges for the service of lending you the principal amount. For most mortgages, you will see this expressed as an “interest rate” which is a small percent charged on the loan. A portion of your monthly mortgage payment goes to paying down the interest owed.

Taxes – tax costs are not included in your monthly mortgage payment, but will be added by your lender as part of your yearly expenses when calculating your debt-to-income ratio (see below). Property taxes and other assessments will need to be paid each year.

Insurance – this is the cost of insuring your mortgage and your home. Like taxes, your mortgage lender will typically include some insurance costs in your DTI ratio calculation.

How Lenders Use PITI

Many mortgage lenders use some form of PITI calculation when determining your debt-to-income ratio. This ratio helps the lender understand your ability to manage your monthly mortgage payments without being at risk of missing one. The lower the ratio, the more likely you can afford all your monthly expenses.

Don’t Forget Your Other Monthly Expenses

Finally, don’t forget that along with PITI you will have a variety of other monthly expenses that need to be budgeted for. Leave some space for utilities, repairs and other renovations that need to be made throughout the year.

Once you have the full picture of what is coming in and going out each month, managing your expenses is easy. When you are ready to discuss or apply for a mortgage, get in touch with us. Our friendly team of mortgage professionals is happy to help.

Do Your Home Upgrades Qualify As Medical Expenses On Your Taxes?

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Do Your Home Upgrades Qualify As Medical Expenses On Your Taxes?You might want to make some upgrades to your house, but they could be a bit expensive. If you make upgrades to your house that qualify as medical expenses, you may be able to deduct them from your taxes. Before you do so, you should always reach out to a qualified accountant who can review your work to make sure you are allowed to claim that deduction. What are a few examples of home upgrades that might be tax deductible?

Upgrades That Address Joint Pain

If you have severe joint pain, you may have a difficult time navigating your house. You may need to make some upgrades to your house that make it easier for you to get around. For example, you might be thinking about installing a wheelchair ramp. Or, you might need to make some changes to your stairs and your railings. There is even a chance that you may consider installing a pool in your house that can help you stay healthy. Remember to get a letter from your doctor stating that these upgrades can help you treat your arthritis.

Upgrades That Address Chronic Lung Conditions

If you have a chronic lung condition, you may need to make changes to your home’s HVAC and air filtration systems to address your symptoms. If you or your children continue to have asthma, allergies, or COPD exacerbations, you should talk to your physician about changes you can make to your HVAC system to reduce contaminants in your area. It can be expensive to make upgrades to your home’s HVAC and air filtration systems, but you may be able to deduct them from your taxes if you can prove they are required to address your symptoms.

You May Need To Get An Appraisal

These home upgrades could increase the value of your house, so you may need to talk to your real estate agent to get an appraisal before you claim a deduction. Then, don’t forget to combine this paperwork with a letter from your doctor stating that these upgrades can help you address medical conditions. Finally, you should always talk to an accountant about how you can properly claim these upgrades as deductions on your taxes.

 

What’s Ahead For Mortgage Rates This Week – December 12, 2022

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What's Ahead For Mortgage Rates This Week - December 12, 2022Last week’s scheduled economic reports included preliminary monthly readings on inflation and consumer sentiment along with weekly reporting on mortgage rates and jobless claims.

University of Michigan Reports Slower Inflationary Growth

The University of Michigan predicted lower inflationary growth as December’s year-over-year reading for inflation fell to 4.6 percent from November’s year-over-year reading of 4.9 percent. This was the lowest inflation reading since September 2021. Analysts credited lower gasoline prices for slowing rapid inflation rates seen in recent months.

Falling gas prices also contributed to higher consumer sentiment levels reported in December’s edition of the University of Michigan’s Consumer Sentiment Index. Consumer sentiment rose to an index reading of 59.1 in December as compared to November’s reading of 56.8 and analysts’ expected reading of 56.5.

Component readings for current consumer sentiment data included consumer sentiment regarding current economic conditions and consumer views about economic conditions within the next six months. December’s index reading for consumer views of current economic conditions rose to 60.2  from November’s index reading of 58.8. The index reading for consumer views of economic conditions within the next six months rose to 58.4 from November’s reading of 55.6.

Mortgage Rates Fall, Jobless Claims Rise

Freddie Mac reported lower average mortgage rates last week as the average rate for 30-year fixed-rate mortgages fell by 16 basis points to 6.33 percent. The average rate for 15-year fixed-rate mortgages fell by nine basis points to 5.67 percent.

First-time jobless claims rose to 230,000 claims from the previous week’s reading of 225,000 initial claims filed. Ongoing jobless claims also increased last week with 1.67 million continuing claims filed as compared to the previous week’s reading of 1.61 million ongoing jobless claims filed.

What’s Ahead

This week’s scheduled economic events include reports on inflation, the post-meeting statement of the Fed’s Federal Open Market Committee, and Fed Chair Jerome Powell’s press conference after the FOMC statement.

Should You Consider Purchasing A Newly Built Home?

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Should You Consider Purchasing A Newly Built Home?If you have been in the process of looking for a home for a long time, you understand just how difficult it has been. You may have considered building your own house, but after seeing the bidding wars for land before you even start building, you may have crossed newly built homes off your list. Now, there are a few reasons why you should consider adding new homes back to your search. 

There Is An Elevated Supply Of Newly Built Homes

Right now, there is an elevated supply of newly built homes. Even though the overall inventory of available houses continues to lag behind, new single-family home inventory remains elevated. This means that builders may offer incentives to sell the homes they have already started building. They want to keep building homes, but they cannot do so until they sell the houses they have already constructed. They may even provide you with discounts on special features.

You Have Fewer Repair And Maintenance Expenses

Another benefit of purchasing a new house is that you will have fewer repair and maintenance expenses. Down the road, you may have to replace the hot water heater, the HVAC unit, and even the roof on your house; however, when a house is brand new, there is a much lower chance of something going wrong. That can free up money that you can spend in other areas.

You Customize The House To Meet Your Needs

Finally, if you purchase a new house, you also have the option to customize it to meet your needs. For example, you might want a bonus room that can serve as a separate area in which your kids can play. Or, you might want your kitchen to be laid out in a certain way. You may also want your garage to be large enough to fit multiple cars. Your builder may work with you to provide you with those specific features.

Consider Purchasing A Newly Built House

If you are having a hard time finding a resale home to meet your needs, consider working with a construction company to build your own house. It may be more affordable than you think, as builders may offer incentives if they have an oversupply.

How To Age Gracefully In The Comfort Of Your Own Home

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How To Age Gracefully In The Comfort Of Your Own HomeThere are many people who would rather age in the comfort of their own homes than in a large nursing home somewhere. As people get older, they are more susceptible to slips, trips, and falls. Their joints do not work as well as they used to, they might have a difficult time balancing, and their eyesight may start to fade. If you want to age comfortably in your home, there are a few upgrades you should consider making to your house.

The Bathroom

The bathroom is one of the most dangerous rooms in the house because the floor can get slippery. You may want to install some grab bars on the walls, railings next to the toilet, and even an extra seat in the shower. Do not forget to consider installing extra lights to make it easier to see. You may also want to install some flooring that is less slippery than traditional tiles. 

The Floors

You may want to consider installing different floors in other areas of the house as well. For example, you may want to install more carpet in the house, which is less slippery than traditional flooring. You should also consider getting rid of area rugs, as they tend to have tassels that stick out. These tassels can make it easy for someone to trip and fall. 

The Kitchen

Kitchens can also be dangerous. People tend to get forgetful as they get older, and you may forget to turn the stove off. You may want to consider installing stoves that automatically shut off the power after they have been left on for a certain amount of time. You should also consider installing additional lighting in the kitchen that makes it easier to see. That way, you have a lower chance of slipping and falling in the kitchen.

Install Some Home Upgrades To Make It Easier To Age In Place

Everyone is different, and you need to decide what is best for you and your family. If you want at age in the comfort of your home, consider making a few of these upgrades. That way, you can reduce your chances of slipping and falling, and you can enjoy your house for as many years as possible.

 

How Large Of A Down Payment Do You Truly Need?

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If you are interested in purchasing a home, how much money should you put down? This is a difficult question that all potential homeowners need to answer, as it will dictate the size and location of the house you can afford. There are a number of factors to consider, so what do you need to know?If you are interested in purchasing a home, how much money should you put down? This is a difficult question that all potential homeowners need to answer, as it will dictate the size and location of the house you can afford. There are a number of factors to consider, so what do you need to know?

Generally, Putting More Down Is Better

There is a solid chance that a home loan is going to be the largest loan you will ever take out in your life. Therefore, there is some risk involved, and you must make sure you can pay it back. You can reduce the risk you take on by putting more money down. That way, you don’t necessarily have to take out such a large loan, and your lender may provide you with a lower interest rate. This could save you thousands of dollars over the life of the loan.

First-Time Homebuyer Options Are Available

The downside of saving up such a large down payment is that it could take a long time for you to save up so much money. Fortunately, there are programs available for first-time home buyers. For example, if you qualify for an FHA-backed loan for first-time homebuyers, you might be able to qualify for a home loan with as little as 3.5 percent down. This might make it easier for you to afford a house.

Is Your Money Better Served In The Market?

Putting more money down for a house may provide you with a lower interest rate while also reducing your monthly mortgage payments; however, you need to think about where your money will work the hardest for you. You may qualify for a lower interest rate if you put more money down, but will your money generate a higher return if you invested in your retirement? You should answer this question when you decide whether to put more money towards your house or more money in an investment portfolio.

Consider Working With An Expert

How much money should you put down for your house? This is a question that has a different answer for everyone, which is why you should consider working with a professional who can help you.