Updated: Sunday, August 18, 2019
Tips on Designing Your Own Floor Plan
Keep Things Easy
While simple living is all the rage, you may not be interested in minimalist design. However, it is important for busy adults to design their homes in a way that keeps things easy.
Do you enjoy outdoor activities such as working on your own lawn or in your own garden? Make sure the entrance youll use the most after these activities is easy to access and that you have a place to dump your muddy shoes. If you have or are planning to have young children, make sure that the first stop in from the garage or the bus has a durable floor thats easy to clean.
Focus on Flow
As soon as you step into your very own home, youll likely start shedding things. It may be a briefcase or work boots. Youll also want to de-stress as you move into your home.
Design choices may include an easy-to-access closet with cubbies and chargers for electronics. If youre planning a custom home sound or lighting system, create a spot for those controllers.
For those who like to entertain, its critical to have plenty of kitchen space for people to gather. An open floor plan is a wonderful way to invite guests into the heart of your home. Plan for an island or a peninsula if youd like your guests to gather in this crucial workspace.
A Word on Security
Security cameras arent just for your front door anymore. If youre away from home for long periods of time, or will have children home alone before you get home from work, the ability to check in on your kids and make sure the interior of your home is secure and safe is crucial. Plans for these tools will need to be made before the walls go up.
Natural Light for a Healthy Brain
The placement of windows and skylights can go a long way to making your home both happy and healthy. Natural light is critical to good brain health and quality sleep.
If nearby houses are closer than you would like, consider putting in frosted or textured windows to allow for natural light without the view. Also, skylights that allow venting are a great way to bring in both sunshine and fresh air.
Not a morning person? Plan your sleeping space away from the rising sun, or avoid a lot of east facing windows. You can enjoy plenty of light with south-facing windows and still sleep in
Build In Some Decadence
Everyone needs a little pampering. As with keeping things easy, its different for every one of us. If you need surround sound in the laundry room, plan this while the walls are open. For those whove always wanted a giant tub, now is the time to treat yourself.
Let this spill into your yard. If your spouse loves to grill, consider building a deck with plenty of space and wiring for a smoker or pellet grill. Few of us can get every luxury weve ever wanted in our homes, but with proper planning you can get at least one feature youve always wanted.
Home design is a lot of fun but also puts a lot of responsibility on the shoulders of the buyer. Work with a designer or architect that is willing to put in the time discussing the things you need and the items you really want.
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Which Type of Loan Is Best? Were Doing an Apples-To-Apples Comparison.
30-year fixed-rate conventional
This is a 30-year loan with rates that are fixed every month. These loans follow Fannie Mae and Freddie Mac guidelines and are not backed by the government like FHA loans.
Pro: With set payments, therersquo;s no need to worry about rising rates. Loans are available for a range of buyers, with options like HomeReady andnbsp;Conventional 97nbsp;that offer as little as 3 down. Also, there is no upfront mortgage insurance fee like you have on FHA loans.nbsp;nbsp;
Con: You have to pay PMI if you put less than 20 down. There also may be higher credit score requirements than FHA loans.nbsp;nbsp;
A 15-year fixed-rate option also has fixed rates for the life of the loan. If yoursquo;re the type who wants to pay your home off more quickly, this could be a good choice.
Pro: You pay far less interest over the life of the loan and pay off your home in half the time.nbsp;
Con: Monthly payments are higher.
FHA loans are federally insured, which is why down payment and credit score requirements are more >
Pro: FHA loans require as little as 3.5 down. Credit score requirements are also lower than conventional loans. You can typically qualify for a loan with a 3.5 down payment at a 580 score, and may be able to get a loan with a score as low as 500 if you have 10 down.nbsp;
Con: Yoursquo;ll have to pay mortgage interest, which you canrsquo;t get rid of unless you refinance. FHA loans also come with an upfront mortgage insurance fee.
ldquo;An adjustable-rate mortgage ARM is a type of mortgage in which the interest rate applied on the outstanding balance varies throughout the life of the loan,rdquo; said Investopedia. ldquo;Normally, the initial interest rate is fixed for a period of time, after which it resets periodically, often every year or even monthly. The interest rate resets based on anbsp;benchmarknbsp;or index plus an additional spread, called annbsp;ARM margin.rdquo;
Pro: Rates are often lower during the introductory or fixed period than what a borrower can get with a fixed-rate loan, making homeownership more affordable initially.nbsp;
Con: Once the ARM gets past the fixed period, monthly payments can skyrocket, leaving owners unprepared and possibly in danger of defaulting.nbsp;
Looking to buy in a rural area? You may qualify for a USDA loan. USDA-eligible homes may also be located in some suburban areas. You can check eligibility on their website.nbsp;nbsp;
nbsp;Pros: USDA loans offer low or even no down payments and low interest rates. Rates can be as low as 1 with subsidies on direct loans.
Cons: Household income is capped and anbsp;mortgage insurancenbsp;premium is required for down payments under 20.
Veterans Administration VA loansnbsp;help military members and veterans purchase homes.
Pro: VA loans tend to have the lowest average interest rates, and loans are available with no down payment. In addition, there is ldquo;no monthly mortgage insurance premiums or PMI to pay,rdquo; according to VAloans.com.
Con: Theyrsquo;re not available to the general public, and veterans must meet a list of conditions.nbsp;
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Comparing Investing in Individual Deeds of Trusts with Investing in Funds
More often than not, individual deeds of trust [DOTs] provide a higher coupon than mortgage pool funds [Funds], but there are some specific downsides to choosing individual DOTs instead of Funds. First, choosing the right DOT takes due diligence and a certain amount of expertise in many cases. Investing in extremely conservative DOTs that have LTVs at lower than 25 may not need a PhD in economics, but the yields on these types of DOTs are usually much lower than one can earn in a Fund; thus, one has to start looking at less conservative assets in order to produce the desired yield.
Another advantage to investing in individual DOTs is that the investor can pick and choose which DOT to in invest in compared to having the manager of a Fund choose which mortgage fits the desired yield. This is really not much different than an investor choosing to invest in specific stocks instead of investing in a mutual fund; for some reason, however, the public seems to be more at ease in trusting a mutual fund manager than a Fund manager. Could this be because mutual funds are regulated under the Investment Act of 1940? Could it be the >
There are some advantages for investing in a Fund [as compared to an individual DOT] that may outweigh the negatives. For one, there is diversification in a Fund, so the risk is spread amongst many DOTs. Unless the Fund experiences a major disaster, distributions to the investor should be uninterrupted. With an individual DOT, a default usually means months or possibly a year or longer [as in the case of a bankruptcy by a borrower]. If foreclosure proceedings are necessary, the Fund will usually handle them without the need for the investor to get involved or have to come up with money to pay the trustee or other costs, such as an attorney. In the case of an individual DOT, the investor/lender has to front these costs. If regular distributions are a must, a Fund is a more conservative route.
Although individual DOTs usually earn a higher interest rate than a Fund [about 1-1.5 on average], Funds may offer the advantage of offering a reinvestment program whereby the interest can compound, usually adding about 35 basis points, whereas an individual DOT has to take the monthly distribution with no ability to reinvest. The gap between interest rates of Funds and DOTs gets even narrower [for most investors] when considering the income tax issue because of the new QBID [Qualified Business Income Tax Deduction] introduced in 2018. Congress decided to allow Funds the benefit of reducing the income that has to be reported on an investorrsquo;s tax return [subject to certain income limits]. Investing in individual DOTs does not allow for this tax benefit. This 20 reduction in reporting can have a significant impact on the after tax rate of return of a Fund compared to an individual DOT. For example, if a Fund is paying 7, and an individual DOT is paying 8.5, the after tax return [presuming a 40 tax bracket] of the Fund is 4.76 whereas the DOTrsquo;s after tax return is 4.80. This 4 basis point difference is not significant, especially if one were to reinvest the distributions in a Fund.
The most important factor nowadays [at least in California] is the continuity of a investing in a Fund compared to investing in individual DOTs due to the downtime experienced in many investorrsquo;s portfolio when a loan gets paid off. In these circumstances, the investor usually calls his broker for another DOT to invest in and may be told that there are no good loans to look at for the moment. The investor is asked to be patient or may be forced to look at less quality DOTs. There is tremendous pressure in the market right now for loans to fund, as there is significant capital looking for a home. This competition for loans has driven down interest rates that an investor can earn on a DOT as well as adding to the length of time to reinvest capital that has been returned due to payoffs from borrowers. When one looks at the time value of money, this delay in redeploying capital can significantly lower the net, after tax, rate of return desired by investors. Money that is not deployed in new DOTs sitting idle in low earning bank accounts bring the net yield down for the investor. For example, if an investor desires an 8 return on an individual DOT, having money sit idle for three months at 1 produces a pre-tax return for the year of 6.25. Money sitting idle for four months lowers the net yield to 5.67. In addition, in many cases, Funds snap up the better quality DOTs, leaving the less quality loans available for individual investors. The main reason for this is that Funds want to produce steady, uninterrupted returns for their investors. They usually desire to avoid loans that have a more likely default rate, even if the yield could be higher by taking on a bit more risk. Some investors lower their quality investing standards in order to keep their money working; thus, investors have to carefully consider whether the benefits of investing in individual DOTs outweighs the benefits of investing in a Fund.
nbsp;Edward Brown is an investment expert and host of the radio show, ldquo;The Best of Investing.rdquo; He is in the Investor >
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