Refi or Wait? How to Choose Between Refinancing Your Mortgage Now or Waiting Until You Need the Money

Refi or Wait? How to Choose Between Refinancing Your Mortgage Now or Waiting Until You Need the MoneyRefinancing your existing mortgage may provide you with the opportunity to lower your interest rate, reduce your mortgage payment and adjust your loan term. For those homeowners who have lived in their home for more than a few years, pulling equity out of the property for everything from a luxurious vacation to making home improvements is a tempting potential benefit.

However, with property values and interest rates adjusting frequently, you may wonder if now is the best time to refinance your mortgage.

Using Equity From Your Refinance

One factor to consider when debating between refinancing now and waiting relates to pulling equity out of your home. If you need access to the cash now for home improvements or other purposes, refinancing now may be ideal. Even if you do not need access to your equity for several months or longer, you can lock in today’s rates and invest the money in other vehicles, such as CDs or bonds, until you need the cash.

Anticipating Market Changes

You may have heard that the interest rates for home mortgages have been slowly rising, and while they remain close to historic lows, they are projected to continue to rise. Nobody can predict with certainty how interest rates will adjust in the next few months and years, and locking in today’s rates may be beneficial. Keep in mind that if rates decline significantly in the near future, you can always look into refinancing again.

Reducing Your Principal

If you have a higher interest rate on your existing mortgage, your principal balance may be reduced at a slower rate than if you refinance to a lower interest rate. In addition, if you refinance from a 30-year term to a shorter term length, your principal balance will also be reduced more quickly in most cases. In many situations, refinancing your home mortgage today may establish a more efficient repayment schedule that allows you to accrue equity at a faster rate.

Each homeowner has unique factors to consider when refinancing based on property value, credit rating, existing loan terms and other factors. While many will benefit by refinancing an existing mortgage today, you can speak with a mortgage professional for specific advice and recommendations regarding your situation. Call your trusted mortgage representative today to inquire about the options and to begin working on your refinance loan application.

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DOC New Home Sales and NAR Existing Home Sales

DOC New Home Sales and NAR Existing Home SalesThe Department of Commerce reported July sales of new homes dropped by 2.40 percent over June to a four month low. Analysts noted that although July’s reading of 412,000 new homes sold fell short of expectations and June’s reading, the new homes sector is volatile and subject to change.

June’s reading of 406,000 new homes sold was revised to 422,000 new homes sold; expectations were based on the original reading. Three of four regions posted a slower rate of growth for home prices with only the South posting a gain.

The average price of a new home in the U.S. rose to $269,800, which is 2.90 percent higher than June’s average home price. Inventories of new homes increased to a six-month level based on current sales pace.

This was the highest inventory of new homes available since 2011. Strict mortgage credit requirements and an elevated national unemployment rate contributed to the lower rate of home value appreciation and higher inventories of new homes.

The good news: New home sales increased by 12.90 percent year-over-year in July.

Existing Home Sales Rise: Steady Mortgage Rates, Rising Rents Cited

The National Association of REALTORS® reported that July sales of previously-owned homes rose from June’s revised figure of 5.03 million sales to 5.15 million sales and achieved the highest reading for 2014.

The existing home sales readings are calculated on a seasonally adjusted annual basis. Existing home sales were 4.30 percent lower than for July 2013, which had the highest reading for existing home sales in 2013.

Lawrence Yun, chief economist for the NAR, said that a growing inventory of available pre-owned homes for sale and strengthening labor markets contributed to sales growth. Mr. Yun said that July’s pace of sales was expected to continue based on mortgage rates holding steady and rising rents for apartments.

The inevitable rise of mortgage rates and increasing home prices were cited as factors that could cool existing home sales in coming months. With the Fed scheduled to complete its asset purchase program in October and changes to the Fed’s target federal funds rate expected within months, mortgage rates are expected to rise. Affordability looms as an obstacle to sales; home prices continue to rise as wages grow at a slower pace than home prices.

The national median price for existing homes was $222,900, which was a year-over-year increase of 4.90 percent. This was the 29th consecutive month for year-over-year price gains for existing homes. The inventory of existing homes for sale increased by 3.50 percent to 2.37 million available homes and represents a 5.50 month supply. Unsold inventory of existing homes is 5.80 percent higher year-over-year. As compared to July 2013′s reading of 2.24 million available pre-owned homes.

Homes sold through foreclosure or short sales have steeply declined from 36 percent of existing home sales in 2009 to approximately 9 percent in July and were down from 15 percent of existing home sales in June.

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What’s Ahead For Mortgage Rates This Week – Aug 25, 2014

Whats Ahead For Mortgage Rates This Week Aug 25 2014Last week’s economic news brought several reports related to housing. The National Association of Home Builders (NAHB) Wells Fargo Housing Market Index for August rose by two points to 55, which was its highest reading in seven months.

Components of the NAHB HMI include builder surveys on conditions related to upcoming sales of new homes, which rose by two points for a reading of 65. Builder sentiment concerning present sales conditions also rose by two points to 58.

Builder views on prospective buyer traffic rose from 39 to 42. Readings above 50 indicate that more builders viewed housing market conditions as positive as negative.

NAHB cited job growth and low mortgage rates as conditions driving higher builder confidence in market conditions.

Housing Starts, Building Permits Up in July

According to the Commerce Department, housing starts and building permits rose in July. Housing starts increased to 1.09 million from June’s reading of 945,000 and exceeded expectations of 975,000. This reading reflects higher builder confidence and could contribute to easing demand for housing as new homes expand the inventory of available homes.

Construction of single family homes accounts for about 75 percent of new home construction. July’s reading was 656,000 single family housing starts on an annual basis. Regionally, housing starts declined by 25 percent in the Midwest, but rose by 44 percent in the Northeast, 29 percent in the South and 18.60 percent in the West.

Building permits issued in July rose to an annual rate of 1.05 million, which was an increase of 8.10 percent over June’s reading of 973,000 permits issued. Permits for single family homes increased by 0.90 percent to a reading of 640,000 permits annually.

July’s readings for housing starts and building permits are in line with overall economic growth and suggest that housing markets may improve in coming months as the supply of new homes increases.

Let’s add more icing to the cake. The National Association of REALTORS® reported that existing home sales rose to 5.15 million on a seasonally adjusted annual basis against predictions of 5.00 million existing homes sold and June’s reading of 5.05 million sales of previously owned homes.

Mortgage Rates Fall, FOMC Minutes Indicate Economic Improvement

Freddie Mac’s weekly survey of mortgage rates reported that average rates fell across the board: The average rate for a 30-year fixed rate mortgage dropped by two basis points to 4.10 percent with discount point lower at 0.50 percent.

The rate for a 15-year mortgage dropped by one basis point to 3.24 percent with discount points unchanged at 0.60 percent. The average rate for a 5/1 adjustable rate mortgage dropped by two basis points to 2.95 percent with discount points unchanged at 0.50 percent.

The Federal Open Market Committee (FOMC) of the Federal Reserve released minutes from its July meeting. Highlights included the committee’s 9-1 vote in favor of continuing the slow pace of reducing economic stimulus.

The minutes indicated that the committee intends to keep the federal funds rate below normal levels for “some time.” Previous FOMC statements have consistently indicated the Fed’s intention to maintain very low short-term interest rates after asset purchases under QE3 end in October, but FOMC has not released a specific time frame or details of its intentions concerning the federal funds rate.

The Fed acknowledged economic improvements, but cited lingering concerns over unemployment, which remains higher than average.

More Good News: Jobless Claims Lower, Economic Indicators Up

Weekly jobless claims fell to 298,000, lower than expectations of 300,000 new jobless claims and the prior week’s reading of 312,000 new claims. Leading economic indicators (LEI) rose by 0.89 percent in July after increases in May and June. Analysts interpreted this reading as a further indication of stronger economic conditions.

What’s Ahead

This week’s scheduled economic reports include New Home Sales, the Case-Shiller Home Price Index and FHFA House Price Index. General economic reports include the Consumer Confidence Index and the University of Michigan Consumer Sentiment Index. It will be interesting to see whether consumer views of the economy are consistent with recent economic improvements.

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Home Buying Tips: Three Items to Watch out for in a Purchase Agreement Contract

Home Buying Tips: Three Items to Watch out for in a Purchase Agreement ContractThe purchase agreement is a vitally important document that outlines the provisions, terms and conditions for the transfer of property.

It should be read carefully and any ambiguities should be clarified prior to signing. It is a legally binding contract between the buyer and seller.

The purchase agreement may vary depending on the location. Most real estate agents use a form that has been approved by a state realtors association.

The seller may have a different version that was drawn up by an attorney. It should not be assumed that they are all the same.

Typically, the purchase agreement will include an inspection period. This allows the buyer time to verify the conditions stated on the purchase agreement. Three of the most important stipulations in the contract are listed below.

All Owners Must Sign the Purchase Agreement

In most cases, the purchase agreement should be signed by the legal owner of the property.

If there is more than one owner, each owner should sign the agreement. In many states, both parties in a married couple have an interest in a property even if the title is held in one party’s name alone. Therefore, the purchase agreement should be signed by both parties of a married couple.

In the event the property is being sold by a corporation, verify that the person signing the agreement is authorized to commit the corporation to the sale.

List All Fixtures to be Transferred with the Sale

The purchase agreement should list all items that are to convey with the property. “Fixtures” are considered items that are attached to the property.

Legally, they should be included with the sale, but more than a few buyers have been dismayed to find the property stripped of countertops, appliances and window coverings. Any fixtures and personal property that are part of the sale should be included in the purchase agreement.

Verify Zoning Ordinances

The purchase agreement may contain various stipulations. One should include the right to cancel the contract if zoning prohibits the use of the property as planned.

Zoning ordinances may restrict the use of buildings or land. This may prove to be an obstacle for someone who intended to include a workshop on the property. The buyer should be able to withdraw from the contract if they discover that zoning prohibits the intended use.

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Separation Anxiety: How to Deal with a Joint Mortgage Loan in the Event of a Divorce

Separation Anxiety: How to Deal with a Joint Mortgage Loan in the Event of a DivorceDuring the course of a marriage, it is common for the couple to acquire property together. This is what is referred to as joint or community property.

When a couple divorces, it is up to the parties involved to determine what happens to this joint property or let a judge use applicable law to determine how property is to be split.

What Happens To The House?

A couple of options are available when deciding what to do with a house where both partners are listed on the mortgage. First, the couple may decide to simply sell the home and split the proceeds from the sale.

Another option would be for one person to give the other person the house as part of the divorce settlement.

Technically, the house is sold or transferred and whoever gets the home is now the sole person listed on the mortgage.

Beware Of The Tax Implications

Typically, the person who gets the house should be the person who is in the lower tax bracket. This is because capital gains taxes may be lower or non-existent for those who are in the 10 or 15 percent tax bracket.

If the house is sold and the proceeds are split, capital gains taxes are exempted on the first $250,000 of profit made on the sale. For a married couple, the exemption is $500,000. Therefore, it may be worthwhile to sell the house before the marriage is over.

What If Children Are Involved?

In the event that the divorcing couple has a child, the best interest of the child must be considered. Typically, a judge will award a principal residence to the parent who will raise the child after the divorce is finalized.

To help the custodial parent afford any payments on the house, the other parent may be asked to help make payments as part of a child support or alimony agreement. This may be beneficial to the noncustodial parent as payments that are considered alimony are tax deductible.

When a couple divorces, they have a lot to think about. As this may be an emotional time, figuring out what to do with a home where both parties are on the mortgage can be difficult. However, those who are divorcing amicably or who want what is best for their children can come to an agreement without a lot of stress or drama.

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Lowballing 101: How to Avoid Insulting a Home Seller when Making a Low Offer for Their House or Condo

Lowballing 101: How to Avoid Insulting a Home Seller when Making a Low Offer for Their House or CondoBuying a home is a huge step for people who are ready to make an investment in their future. Getting a great deal on a home is just as important and knowing how much to offer could be confusing. It is important to make sure the home seller is not insulted by the lowball offer and is ready to negotiate to make sure everyone wins.

Make a List of Necessary Improvements

One of the best ways to validate a lowball offer on a home is to list improvements that need to be made to the property. If the home needs a new roof or a new heating and air conditioning system, these are reasons to offer less than the asking price. Sometimes a home may also need new flooring, paint, or matching appliances which all cost money. The buyer can make a lowball offer stating additional expenses of making sure the home is move in ready.

Explain Any Issues with the Location

Another option when considering a lowball offer is to point out problems with the location. If the home is on a busy street or close to a manufacturing district, the buyer has legitimate concerns. In the offer, list the potential problems of living too close to fast food restaurants, train tracks, or airports. A less desirable location could equal a great buy on a new home.

Provide Pricing for Comparable Homes in the Area

A knowledgeable real estate agent can help compare homes that have sold in the area. When you are writing up a lowball offer, look at the lower priced homes that have sold in the same neighborhood. A seller will quickly realize that if he wants to sell the home, he will need to accept a reasonable offer or risk letting his house sit on the market for weeks or months.

Consider the Seller’s Reasons for Selling

Finally, the seller’s situation can also be key in getting a good deal on a home. If the seller is desperate to sell because of a job relocation or if he has already bought a new home this can be the perfect reason to make a low offer and take the home off the seller’s hands. Without insulting the seller, the buyer can make an offer for less than the asking price and agree to a quick closing.

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Scam Alert! Three Mortgage Modification Scams to Watch out for (And How to Avoid Them)

Scam Alert! Three Mortgage Modification Scams to Watch out for (And How to Avoid Them)As if homeowners who are facing foreclosure don’t have enough to worry about, a multitude of loan modification scam artists have invaded the internet, public files and even foreclosure notices in newspapers in hopes of targeting their next victim. By identifying the top three modification scams and learning how to avoid them, at-risk homeowners can protect themselves (and their homes).

Never Pay For Mortgage Modification Assistance

Many desperate homeowners fall victim to scam artists who offer to provide them with assistance in the loan modification process for an exorbitant fee. Many times the scam artist who promises to provide assistance will require that the homeowner pay the fee upfront, after which they will provide very little assistance or simply take the money and run. Consumers should be aware that assistance and counseling services are offered for free through a number of reputable HUD approved counseling agencies.

Avoid Transferring The Deed

One popular scam that at-risk homeowners often face is the property deed scam in which scam artists promise to purchase the home in question, agreeing to let the desperate homeowner rent it out. They suggest that turning over the deed to a borrower with a better credit rating will offer additional financing opportunities, thus preventing the loss of the home. The scammer often promises to sell the home back to the homeowner, but in reality has no intention of doing so.

Many times the scam artist will sell the home to another buyer. In some instances, the crook will collect any processing fees, take the title to the home and any equity, and then leave the home to default. It is a good idea for consumers who are approached with a property deed scam to report it to the FTC.

Ignore Unrealistic Promises

Mortgage modification scammers often make promises to do such things as negotiate a solution to the foreclosure more quickly, process mortgage payments for the consumer while the negotiation is being worked out, or even guarantee a loan modification. Since the actual lender is the only one who can agree to a loan modification, and this solution requires additional processing time, overnight fixes are almost always scams. Additionally, consumers should never make mortgage payments to anyone other than their lender.

For additional information about mortgage modification scams and how to avoid them, or to receive assistance with working out a solution to avoid foreclosure, at-risk homeowners should contact their mortgage professional.

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What’s Ahead For Mortgage Rates This Week – Aug 18, 2014

What's Ahead For Mortgage Rates This Week Aug 18 2014Last week’s economic news brought little housing-related content, but several economic reports in other sectors contributed to overall perceptions of the economy.

In a speech given in Sweden, Fed Vice President Stanley Fischer noted that the economy might be in a period of “secular stagnation.” This condition is expected to keep interest rates low for longer than expected.

A survey of small business owners showed that confidence increased by 0.70 in July. Job openings for June increased from 4.60 million to 4.70 million. Readings for several reports fell shy of expectations and new jobless claims were higher than expected.

Economic Readings Lower Than Expected, Weekly Jobless Claims Rise

Retail sales for July were flat and fell shy of June’s reading of 0.20 percent, which was also the expected reading for July. Retail sales except autos were also lower in July with a reading of 0.10 percent against the expected reading and June’s reading of 0.40 percent.

Weekly jobless claims were reported at 311,000 against expectations of 300,000 new claims and the prior week’s reading of 290,000 new jobless claims. According to the U.S. Department of Commerce, this was the highest reading since June.

New jobless claims were close to pre-recession levels which suggested a slower pace of layoffs. The four-week average of new jobless claims, which presents a less volatile reading than for weekly reports, rose by 2000 new jobless claims to a reading of 285,750.

Mortgage Rates Lower

Freddie Mac’s weekly survey reported lower mortgage rates last week. Average rates were as follows: 30-year fixed rate mortgages had a rate of 4.12 percent and were two basis points lower than the previous week.

Discount points averaged 0.60 percent against the prior week’s reading of 0.70 percent. The average rate for a 15-year fixed rate mortgage was 3.24 percent as compared to the prior week’s reading of 3.27 percent. Discount points were unchanged at 0.60 percent.

The average rate for a 5/1 adjustable rate mortgage dropped by one basis point to 2.97 percent with discount points unchanged at 0.50 percent.

A couple of good news bytes from last week included an increase in small business sentiment in July. The National Federation of Independent Business Index for July increased from June’s reading of 95.00 points to 95.70 points.

The federal government also reported that job openings increased from 4.60 million in May to 4.70 million in June.

What’s Ahead

Several housing-related reports are set for release this week. The National Association of Home Builders (NAHB) will release its Home Builder Index for August, which measures builder confidence in market conditions for newly built homes.

The Department of Commerce will release Housing Starts for July, and the National Association of REALTORS® will release its Existing Home Sales report for July. The Federal Open Market Committee (FOMC) of the Federal Reserve will release the minutes of its most recent meeting on Wednesday; this could provide details concerning the Fed’s recent monetary policy decisions, which include the wind-down of asset purchases under the current quantitative easing program.

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Experiencing ‘Purchase Anxiety’? How to Calm Your Nerves Before Committing to Buy a New Home

Experiencing 'Purchase Anxiety'? How to Calm Your Nerves Before Committing to Buy a New HomeWhether this is your first big purchase, or your family is moving to a new location or looking for more space, buying a home has its share of ups and downs.

It’s perfectly normal to feel anxious about whether or not you’ve found the right property. Here are some things you can do to make yourself feel more secure with your decision.

Do The Math

You’ve probably already done this, but it’s okay to go over it a number of times to be sure. Factor in your household income and all the bills you expect to pay every month. Add everything up.

It sounds like a stressful activity, but when you look at the numbers and realize that buying a home is actually doable, it can be a liberating feeling.

When you know for sure you can make it as a homeowner without getting underwater, you will feel more confident.

Meet The Neighbors

If you haven’t had the chance to knock on a couple of doors yet, you should spend some time saying hello to people in the neighborhood. The more you can get to talking with families that are just like yours, the more you will be able to picture yourself as a member of the community.

If you have kids, find out if there are other kids the same age nearby. That will help to ease their anxiety about moving as well.

Ask Your Agent

Don’t feel like you are being overly cautious if you ask your real estate agent and or mortgage professional your lingering questions. Make sure you’re getting a good price for the area, and make sure you know about any issues with the condition of the property.

You should be able to trust that your realtor and mortgage professional are excited for your decision.

Familiarize Yourself With The Neighborhood

Take a drive and figure out which stores you’re nearest to, the route you can take to get to work, and which other amenities you might take advantage of. Home buyers often underestimate how important living in a safe neighborhood with plenty of accessible businesses can be.

The more you can imagine yourself living at your new address, the better you will feel.

Remember, never sign the papers on a new home unless you feel one hundred percent secure in your buying decision.

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Can’t Get Pre-Approved for a Mortgage? Here Are Three Tips to Try to Get a Mortgage Approval

Can't Get Pre-Approved for a Mortgage? Here Are Three Tips to Try to Get a Mortgage ApprovalFew people in the world can afford to pay the entire cost of a new home upfront, which is why banks and other financial institutions offer home loans. Also known as mortgages, those loans let you make monthly payments to pay off the money you borrow and the interest charged on that loan. If you can’t get approved for a mortgage, try using a few easy tips.

Improve Your Credit Score

When you apply for a home loan, the lender looks at your credit history and credit score first. Your credit history contains a long list of all the money you borrowed in the past, but it also shows your total debts, medical bills and if you had a foreclosure or a bankruptcy. Your credit score is a three digit number based on your ratio of debt to credit, any defaults on your account and any issues you had in the past.

If a lender denies you for a mortgage, get your credit score up before you apply again. Even something as simple as paying off more of your debt can increase your score by a few points. Eliminating bad debts and removing any mistakes from your credit report can also help.

Apply with a Cosigner

Applying for a loan with a cosigner is another option for those with poor credit. The lender will put more weight on the credit score of your cosigner than the lender does on your own credit report. You want to find someone with a close connection to you and someone who has a good credit score.

Your cosigner agrees to pay back the loan if you default on that loan. The loan will also appear on your cosigner’s credit report, which means you need to find someone willing to take a chance on you.

Look for Cheaper Homes

After applying for a loan, the lender looks at your credit history, your income and other factors to determine how much money you can borrow. Applying for a more expensive home might result in a rejection. The lender can determine that you cannot afford to purchase that home, but applying for a home that costs less might help you get the loan you need.

It’s possible for you to obtain a mortgage that helps you pay for the home of your dreams. Applying with a cosigner, improving your credit and looking at cheaper homes might help you get that loan.

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