How to lower your mortgage rate when buying a home

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Mortgage rates took a big leap after the presidential election and are continuing to move higher. Demand for homes is strong, but home prices are hitting new highs and affordability is weakening.

For the average buyer who was thinking about getting into a new home last summer, but didn’t, the monthly payment on that same home is now considerably higher. There is, however, a way to lower it by buying down the rate.

“Buying your rate down, or ‘paying points,’ means you’re paying an extra fee on top of standard loan fees like appraisal, underwriting and a credit report to get a lower rate.

Of course that means you have to have more cash upfront. The math isn’t as complicated as it seems. First, a “point” is 1 percent of the amount of your loan, so if you are taking out a $200,000 mortgage, 1 point would be $2,000. Lenders will lower your rate if you pay that point at closing, or, at the start of the loan.

“If you were getting a 30-year fixed loan of $325,000, you might get two options with and without points. Today the option with zero points might show the rate as 4.25 percent, and the option with 1 percent in points – equal to $3,250 – might show the rate as 4 percent,” said Hebron. “Paying $3,250 at closing to lower your rate by .25 percent lowers your payment $42 per month, and lowers your interest cost $68 per month.”

How do you know if you should buy down the mortgage? It’s all about time – how long you expect to be in the home and have that same mortgage. What is the savings? Here comes more math – this time from Matt Weaver, vice president of sales at Finance of America Mortgage.

“We can calculate this figure by taking the dollar value of the buy down and dividing it by the monthly savings from the lower interest rate, then dividing that figure by 12 months. So as an example, let’s say a homebuyer will need to pay $2,000 in buy down to generate $30.00/month in savings. If we divide $2,000.00/$30.00, we would conclude it would take 66.7 months, or 5.5 years, to recoup the cost of the buy down – now you can ask yourself, ‘Do I reasonably foresee myself staying in this home for at least 5.5 years?’ in order to truly capture the return on your investment,” explained Weaver.

Sounds simple, if you have the cash and the time, but buying down a mortgage, as with everything else in housing, carries some risk.

“As they say, ‘A dollar in the present is worth more than a dollar in the future.’ The risk with the uncertainty in length of ownership coupled with the possible need of that same cash for any unforeseen expenses poses a risk for homebuyers considering a buy down,” said Weaver. “The buy-down strategy can be worthwhile with a longer-term view in mind, longer term being defined as seven years or greater.”

The benefits can also vary lender to lender. Shopping for the best rate is always a good plan but even more important when you’re looking to buy down.

“The break-even time on buying down varies from lender to lender and from rate to rate, generally in a range of five-10 years. Look at different combinations of rates and upfront costs side-by-side and see which makes the most sense for you,” suggested Matthew Graham, chief operating officer of Mortgage News Daily. “Heads-up: Some lenders with stricter interpretations of recent regulatory changes no longer allow this flexibility.”

If you really don’t see yourself in the home for more than seven years, or even 10, you might want to consider an adjustable-rate mortgage (ARM). These carry much lower interest rates and can be fixed for five, seven, 10, even 15 years. They were vilified during the housing crash because so many people took them out and then couldn’t afford the payments when they adjusted, but the ARMs of today are not those of years past.

One more thing to consider is the rate itself. Mortgage rates are rising, but they are still near historic lows. If you are really on the edge of homeownership, perhaps you’re a young first-time buyer, then buying down the rate is probably not for you. The odds are you’re going to want to be more mobile, and staying in the home for seven years is longer than it sounds. Bailing out of the home before you expected is a real risk.

“The other risk of buying down your rate is that rates drop after you do so,” cautioned Hebron. “For now that risk is low. The Mortgage Bankers Association is predicting that rates will rise about .375 percent from current levels during 2017.”

While rates are expected to rise, the experts have been wrong before. Rates could just as easily come down and credit availability could loosen up, depending on how the new administration tackles mortgage reform. Rates are also sensitive to global financial markets, which are always a wild card, and especially so now.

Source: Dian Olick-CNBC Real Estate Reporter

http://www.cnbc.com/2016/12/29/rising-mortgage-rates-making-you-nervous-heres-how-to-lower-yours.html

 

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Five interview questions you need to ask your realtor!

interview-realtor

If you’re a first-time homebuyer, you may be wondering how to start the process. After browsing homes online, the next step for homebuyers is often choosing a Realtor.

But how do you find the best ones out of all the available choices?

Here are the five questions to ask your real estate agent:

1. What is your experience working with first-time homebuyers?

Oftentimes, first-time homebuyers will rely on a personal referral from a family member or friend when they start the buying process. While this is a great way to be introduced to a real estate agent, you need to make sure the agent has the skill set and patience to work with a first-time buyer. A real estate agent should take the time to walk through the entire purchase process from loan pre-qualification, a needs analysis (what are you looking for, the area you want to live, commute times, price point, etc), how to look at homes objectively, reviewing the contract with you prior to writing an offer, how a contract will be written to your benefit, funds needed to close, funds needed AFTER closing, closing time lines, etc.

2. How long have you been in the real estate business?

While there are many excellent agents that are new to the business, making sure you have experience working on your side is a key to your success in finding and negotiating a great deal. Working with a new agent or even an agent who has had his/her license for years, but has not closed a lot of transaction may not be in your best interest. Don’t get me wrong, there are some exceptional agents who have not closed a ton of transactions, but you should consider experience over someone you “like.” You want to make sure your agent is knowledgeable about writing offers with the terms working in your favor.

3. Are you working for me and in my best interest throughout this transaction?

Buyers often call on a home for sale from a sign in the yard, and the listing agent wants to show you the home. The listing agent has signed a contract with the seller to work on their behalf. They cannot work for you and the seller at the same time while trying to get both sides the best deal. If you do hire a real estate agent that also works with sellers, ask them up front how this will work if you are to view a home they are selling. Buying at a discount or at terms that work in your favor are extremely important when buying a home for the first time. I like to say that you earn your equity in the purchase of the property, not necessarily when you go to sell the home, but when you buy. Equity is wealth. You will need someone working FOR you and in your best interest.

4. How will you communicate with me?

The right amount of communication from an agent should reassure you that the agent is working hard to find you the home of your dreams. Buyers should hear from their agents without prompting. Agents should communicate often about open houses, new listings, setting up showing times, and changes within the market.

With prices high and inventory low in the current market, there’s likely to be multiple offers on the home you want, and a breakdown in communication could be the difference between an accepted and a denied offer. Ask how often the agent will communicate and what’s his/her preferred method. Will he/she primarily use email or phone, and how does that lines up with what you’re looking for?

5. Are there any fees I need to pay you?

A buyer’s agent is paid by the seller in almost all transactions. However, asking this question is going to be important so you know of any fees you may be responsible for at closing. Some agencies charge a “transaction fee” which may or may not be negotiable.

Source: Kelsey Ramirez, Housing Wire

 

http://www.modernorealty.com/2016/11/16/five-interview-questions-you-need-to-ask-your-realtor/

 

 

 

How to save your credit through the holidays while buying a home.

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We’re roughly one month away from the beginning of the busiest shopping season of the year. Millions of people will descend on shopping malls and retail websites to buy holiday presents. And while credit scores are not likely at the top of any gift-givers’ priority lists, you’d be surprised just how active those scores might be.

First and foremost, if you apply for a new credit card or higher spending limits on existing cards for the holiday season, the card issuers will probably request your credit score from one or more of the national credit reporting companies (CRCs), Equifax, Experian and TransUnion. The same is true if a new car is on your shopping list or if you choose to open a store credit card account. Just as they would at any other time of year, those score inquiries from lenders can cause a dip in your credit score.

The shopping-season strategy here is twofold: You want to maximize your score before applying for this holiday-related credit, and you want to avoid having these holiday loans lower your score in advance of any major borrowing you may be planning in the early months of the new year.

Since you want to get the best available borrowing terms on any new loans you seek for the holidays, you should try to get your credit score as high as possible before applying for credit. Ideally that means you’ve got your outstanding card balances as close to zero as possible and at 30 percent or less of their spending limits. Ideally, it also means you’ve allowed a few months of timely payments to pass since the last time you applied for credit, since inquiry-related score drops typically rebound within a few months, as long as you continue making your payments on time.

Conversely, if you plan to seek major loans in the spring (e.g., if you’re considering a new home or car purchase in spring or early summer), be aware that your holiday-season borrowing could keep your credit score from being in peak condition when you apply for those loans.

So, what do you do? There are several ways you can protect your scores during the holiday season to avoid any inadvertent negative score impact.

Credit scoring systems will consider and potentially penalize you if you have too much credit card debt appearing on your credit report, so the goal is to prevent holiday debt from showing up on your credit reports. Here’s how:

Any part of a new outstanding balance that you pay off before it appears on your monthly statement will never appear on your credit reports. So log in to your credit card account and make a payment before the Statement Closing Date, which is almost always exactly 21 days before your due date. If you do this routinely, you can get the convenience and safety of using credit cards for holiday shopping without hurting your credit score.

If you start using that trick before the holidays, you’ll be rewarded with a higher credit score in the new year. Think of it as an early resolution.

Source: Vantage Score

 

Link: http://www.modernorealty.com/2016/11/01/how-to-save-your-credit-through-the-holidays-when-buying-a-home/

 

 

 

Fall home improvements for less than $500

home-improvements

Homeowners can add to the resale value of their home before selling their home.

As the seasons change the weather gets colder, more homeowners begin to turn their thoughts to the coming winter, and the preparations their homes might need to get through it comfortably.

Although there are a lot of expensive upgrades and improvements that owners could do on their homes this fall, there are also several others that can have just as big an impact on comfort, energy efficiency and how well the property will hold up through the coming months that will cost a lot less.

These fall home improvements all cost less than $500 and will still give homeowners and sellers a lot of bang for their buck.

1. Insulate the attic

The vast majority of homes today are under-insulated, leading to higher energy bills, colder interiors in the winter and hotter interiors in the summer.

And even in homes that do have adequate insulation, it’s important to remember that older insulation does break down over time, and it may become displaced by rodents, pests or workman, all of which can reduce its efficiency.

Insulation often tops the list of things homebuyers like to see because it means they’ll have lower utility bills, while staying more comfortable year round.

Adding the insulation before the cold weather sets in, when homebuyers have it in mind and are questioning the utility bills, gives it a chance to shine during the home inspection, while at the same time allowing the seller to recoup a whopping 116.9% of the costs at time of resale, which is an extremely attractive selling point.

Project timeline estimate: DIY homeowners can tackle this project over a weekend. Hiring a pro to handle the job can get it done in less than one day.

Cost: The average cost of insulating an attic is around $400.

Money saving tips: Invest in batts that don’t use fiberglass, and have them installed DIY to save on labor costs. Purchase the highest R-value insulation available to allow the new homebuyers to save more on their energy bills going forward and to get the best ROI.

2. Put in storm windows

Once the warmer days are over, cool air starts seeping in around your existing windows and doors. This is due to an air gap that is present in many homes, which can account for a loss of as much as 40% of the energy used to heat the home.

Putting up storm windows before a home is being shown will eliminate drafts and make it more comfortable for buyers walking through.

Best of all, according to Energy.gov, installing them will save the homeowners 12% – 33% of their energy costs, while installing any new windows can help recoup as much as 73% of the cost at time of resale, which means that this simple project can help them save, while making a better impression on buyers at the same time.

Project timeline estimate: It takes just a few hours to put up storm windows all around the home, seal them in and insulate them.

Cost: The cost of installing storm windows is around $275.

Money saving tips: Install storm windows in the draftiest rooms to make them feel more comfortable for buyers walking through.

3. Seal an asphalt driveway

Tiny cracks that appear in the driveway over time both detract from the house’s curb appeal and can lead to big holes and bigger expenses if left alone over the winter.

The cooler fall days are the perfect time of year to seal an asphalt driveway because the lower temperatures both mean that the asphalt will cure more quickly and that the VOCs and scent it gives off will be lower and less likely to put off homebuyers.

Having the seller seal up these cracks now means that there won’t be major pot holes showing up in the spring after the freeze-thaw cycles are complete, and it means that the driveway will look fresh, attractive and likely to increase curb appeal for the whole property.

Sealing the driveway protects it, which in turn helps it maintain its value; failing to seal the driveway means that the property could lose value over the winter when the damage is done.

Project timeline estimate: It takes about three to four hours to seal a driveway, and another one to two days for curing.

Cost: The cost to seal a driveway is around $200.

Money saving tips: Tackling this job DIY will get the biggest ROI and save money in the process.

4. Hydroseed the lawn

The cool nights and warmer days of fall make it the perfect time of year to seed a lawn. Grass seeds grow and take root better in cooler weather, so sowing new seed at this time of year will create a richer, fuller lawn in the spring.

Hydroseeding is one of the least expensive ways to seed a lawn, nourishing it for the coming winter months. It can be done DIY by the seller as well, as a way to cut costs

Improving the landscaping and lawn of a property can have an impact of as much as 20 percent of the value of the home, making this a smart fall decision. The landscaping is also one of the first things a buyer sees, which makes it an important part of the home’s curb appeal.

Project timeline estimate: Hydroseeding takes a few hours to a full day depending on the size of the lawn.

Cost: The average cost to hydroseed a lawn is $0.50 – $1 a sqft.

Money saving tips: Seed the lawn DIY to save the most. Fertilize at the same time to add additional nourishment and ensure that the grass grows properly.

5. Install an electric fireplace

As the weather turns cooler more people begin spending time indoor, which can lead some people to begin thinking about cozy, warm spaces, such as rooms with built-in fireplaces.

Electric fireplaces are clean, energy efficient additions to any home that will add instant visual appeal and warmth at the same time, something that both the buyer and the seller can appreciate.

They range from plug-in units to built-in features so it’s easy to find one that fits the room’s decor, and the seller’s budget, easily.

And according to realtor.com, adding any working fireplace, including electric and nicely kept mantel to a home can add as much as $12,000 to the home’s value, which makes it attractive to current homeowners and new buyers alike.

Project timeline estimate: Plug-in electric fireplaces can be installed in just minutes, particularly if there is an existing firebox. Otherwise, they can be built into a wall or alcove in one to three days.

Cost: The average cost to install an electric fireplace is around $300.

Money saving tips: Opt for a plug-in unit to save the most on building or installation fees. Use an existing fireplace to convert.

As chilly weather sets in, it’s important to leave an impression of a warm, cozy home that’s welcoming to everyone that enters.

Upgrading and improving a home to include these features, doesn’t need to break the bank either; to find out more about what things cost, be sure to visit the cost guide.

Source: Yuka Kato, Fixr.com

Link: http://www.modernorealty.com/2016/10/26/fall-home-improvements-for-less-than-500/

 

 

 

What are the biggest mistakes homebuyers make?

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Some homebuyer seem to make constant mistakes when buying a home. In the world of seasoned Real Estate Agents, we have seen all the mistakes this group of homebuyers have made.

Here’s a list of homebuyer mistakes we have seen through out our career and still homebuyers regularly make today.

Mistakes that homebuyer make.

  1. Not talking to lender first.
  2. Making new, big purchases while home shopping, (for example, new cars)
  3. Paying to much attention to online home valuations.
  4. Looking at too many homes.
  5. Getting too emotional.
  6. Not knowing the neighborhoods where they’re looking.
  7. Setting an unrealistic timetable.
  8. Relying on a friend or family member for appraisals, inspections and other needs.
  9. Looking at homes beyond the price range.
  10. Skipping an inspection.
  11. Offering to little for properties.
  12. Putting to much trust in the listing agent.
  13. Choosing the wrong agent.
  14. Waiting to long to make an offer.
  15. Overpaying for a house.
  16. Looking in the wrong location.

By learning the correct information you can avoid making these mistakes when buying your home. Reach out and pick our brain, there are no wrong questions, we are here to help you through the home buying process.

Link: http://www.modernorealty.com/2016/10/19/what-are-the-biggest-mistakes-homebuyers-make/ 

How to save for emergencies

saving-money

Saving for emergencies can seem like an impossible goal.

My budget is already tight, you say. How am I supposed to save money? 

This is a question asked by millions of consumers every day. The good news: it’s possible to prioritize savings without overhauling your life. A few small changes could help you establish a nest egg to protect you from unforeseen expenses that can cause credit damage. For example:

  1. Count the dollars and cents. Like an athlete counts calories, it’s time to dig deep and pay more attention to how your money is spent. Download a budget-tracking app like Mint.com or Spendbook to help you visualize your purchases. Set limits and compare weeks to see where you can afford to cut back and redirect your income to savings.
  2. Cut one unnecessary expense. Building up savings shouldn’t feel like a punishment, which is why you shouldn’t cut all the things you love in order to satisfy your goal. Begin with one thing-whether it’s going out too often, take-out meals or an overpriced cable bundle-and slash it from your budget. Use your savings to pad your bank account and consider yourself successful. Financial health is all about balance. You can still enjoy your lifestyle while saving for important expenses.
  3. Withhold less from your paycheck (safely). Did you receive a large tax return this year? Unless you had an overwhelming list of deductions, there’s a good chance you are withholding too much from your paycheck. Although it’s usually unwise to withhold too little, consider reassessing your decision in order to keep more funds liquid and accessible. Use the IRS’s calculator or speak with a financial planner to help you make the decision.
  4. Profit from spring (or summer) cleaning. Spring cleaning is behind us, but summer is the perfect time to purge unwanted items and earn a profit in the process. Take an inventory of your home and consider selling underappreciated items on eBay, Craigslist or even using your own yard sale. Pocket the cash for emergencies and enjoy the benefits of a more functional home.
  5. Use credit repair to your advantage. Credit repair has the power to cut stress and add up to big savings. As your score increases, use those savings to protect yourself from future credit dangers. Look for advantages in the following areas:
  • Interest rates. Better credit equals lower interest rates for your existing consumer credit cards and future deals. Pass those savings on to your bank account for an instant and pain-free method of emergency funding.
  • Fees. Late payments are bad for your credit and your pocketbook. Use your budgeting app as a reminder to pay your bills on time to avoid the consequence. Why spend $50 on a late fee when you could save it instead?
  • New benefits and rewards. The credit elite have access to the best interest rates and credit accounts. The latter is stocked with deals like frequent flyer miles, cash back, shopping discounts and more. Celebrate your success by moving up the credit ladder and taking your savings to the bank.

Source: Lexington Law Blog

Link: http://www.modernorealty.com/2016/10/12/how-to-save-for-emergencies/

 

 

6 things that’ll sell a home faster.

Exterior house

Often, what helps a home sell faster is also what helps a home sell for more.

Surprisingly enough, just having a low price isn’t the key. Homesellers need to think of their property as a product – something to market – instead of home. When they do, the result will be a fast sale at a great price.

1. Stage the yard

The first thing people see when driving up to a home is the yard. Parking at the curb, hence the term “curb appeal,” buyers make an instant determination of how desirable a home is by how it looks. First impressions are everything, right?

A beautiful front yard makes a good impression that should continue when potential buyers walk in the house.

Remove weeds, rake leaves, trim hedges and anything else to clean it up. Then, you can work on staging the yard.

Anything new including plants, grass or mulch will always brighten up a yard. Keep a realistic budget in mind, and skip the major projects (such as a new driveway) unless absolutely necessary.

2. Clean, clean, clean!

The power of a good cleaning job, inside and out, can’t be emphasized enough. Start outside the house after staging the yard. Pressure washing the walls and cleaning the windows is a good start. 

If repainting is being considered, try cleaning first to see how the home looks. Often just removing dirt is enough to brighten the home’s look.

Inside the home, homeowners need to get into every corner and crevice to remove dust, grime or dirt. The places people will be most impressed by the work are the kitchen and bathrooms. The more “new” the house looks, especially in those rooms, the better the impression on buyers.

Why all the hard work? Buyers like move-in condition and will pay more for it.

3. Remodel or upgrade?

The best returns come from the smallest improvements; new trim (door and window casings, baseboard, crown molding), new paint and new flooring all create a fresh new look around the home at minimal cost.

Stepping up from that includes upgrading appliances, fixtures (lights, faucets, etc.) and replacing windows. These will all make the home look newer and nicer, which helps the home sell faster.

Major remodeling, such as replacing the kitchen or bathrooms, should only be considered if necessary. Although doing major upgrades will help a home sell faster, the time it takes to do the upgrades could be long.

4. Declutter and stage the home

All the “little stuff” sellers have around their house, including collectibles and photos, should be put away.

After that, look at each room and see whether there are extra pieces of furniture that could be removed. The key to decluttering is, less is more.

Buyers want to see large rooms where they can visualize living there. The more stuff they have, the harder it is to visualize.

Decluttering makes rooms feel larger, which makes the home more appealing to buyers.

Staging is often ignored or dismissed by agents as not important, most often because of cost. However, buyers and sellers, and their agents, all feel that staging increases the value and appeal of a home.

Equally important is how well a staged home shows in photography. As with curb appeal, the better the home looks inside, the faster it will sell.

5. Use professional photography and marketing

Use a professional photographer and produce professional marketing materials with the high-quality photos. All too often consumers don’t question the quality of the photos used to market the home.

With over 90% of buyers doing their home shopping online, professional photos are essentially attracting more buyers and selling the home faster and at a better price.

Good marketing makes a huge difference in how buyers see a home. Professional photos will be seen by buyers through the MLS and consumer real estate portals. All of which are designed to get buyers to fall in love with and buy the home.

6. Price effectively

A good agent will analyze recent sales and select a price that is designed to entice buyers to make offers. Pricing a home is not like pricing a car or TV. What the buyer ultimately pays is rarely what the list price is.

In most markets, the best strategy to attract the most buyers is to price just a bit low. This frequently results in multiple offers, competitive bidding and a fast sale than at a high price.

The reason this works is that the lower price makes the home visible to more buyers and appears to be a bargain. When this pricing strategy is combined with all the steps mentioned above, buyers see a beautiful home in excellent condition at a great price. Of course, they want to write an offer!

Make it happen!

Ultimately, the three key factors in making a home sell faster are cleaning and/or remodeling, staging and professional marketing. As a homeowner, doing all three will maximize both the speed of selling but also price. Although pricing is absolutely critical, the price offered by buyers will be driven by the other three points.

Source: InMan News

Link: http://www.modernorealty.com/2016/08/03/6-things-that-ll-help-sell-a-home-faster/