|
|
21 October 2011 4 Ways to Instantly Increase the Value of Your Home
1. Keep up with the Maintenance: Small repairs and the general neglect of a home can make it appear less appealing than it really is. Perform an inspection to eliminate the risk of serious problems, then use the condition as a negotiation tool.
2. First Impressions are Lasting Impressions: More than one home has suffered from a bad first impression; overgrown shrubs, faded paint, lack of shutters and stained concrete walkways make any home look tired and dull. Fortunately, first impressions are fast and affordable projects; landscaping, pressure washing and a new doorknob quickly turn a tired entrance into an inviting space.
3. Upgrade Lights and Appliances: Upgrading lights and appliances might be one of the best ways to add value to any home. Energy-efficient appliances and beautiful LED lighting not only provide a modern, up-to-date appearance but are quieter, easier to operate and more dependable than older models.
4. Get a Cosmetic 2nd Opinion: If shag carpets and 1970's paint choices are still your pride and joy, then your home may need a cosmetic makeover before hitting the open market. Rather than allowing potential buyers to succumb to the “shock and awe” when encountering your cosmetically challenged home, strive for neutral colors and non-personalized decorations. Cosmetic fixes often result in the largest “bang for the buck” when it comes to adding value to the price of a home. 4 October 2011 5 Ways to Spot a Great Value
Thanks in part to changing demographics combined with the economic downturn, a major move to get back to the basics is a hot trend in today's real estate market. For those seeking maximum value at a minimum price, keep these essentials in mind.
Bigger Isn't Better: Bigger spaces are associated with higher utility bills, increased property taxes, expensive insurance and even more maintenance concerns. Instead of picking the largest house you can afford, search for the one with the amenities that your family will truly use.
Good Neighbors in Great Hoods: Friends, family and wonderful neighborhoods are major attractions. In fact, research shows that homes located in top-rated school districts routinely fetch 10% more than do similar-sized homes in less desirable districts. Family-oriented neighborhoods with parks and other amenities are highly desirable while empty-nesters can save thousands by searching for similar homes outside of popular school districts.
Fruit Trees and Gardening are a Big Trend: Throughout the nation, high-maintenance lawns are giving way to eco-friendly (and budget-happy) gardens, fruit trees and other down-to-earth activities. Ask about HOA restrictions and the cost of water bills prior to buying with the intent of starting a garden.
Going Green is Bigger Than Ever: From energy-efficient appliances to environmentally friendly building materials, green is not only "in" but bigger and better than ever. Save thousands of dollars by searching for homes that have already implemented upgrades like LED lighting and Energy Star appliances.
Entertaining: As the economic excess of recent years continues to drive down the market, people are interested in entertaining, exercising and even eating at home more. Focus on properties that support your interests and lifestyle for today and tomorrow.
Remember, the average person remains in a home for seven years, so buy right to make sure that your next house truly feels like home. 3 October 2011 5 Reasons to Buy a Home Right Now!
Buying right is the first step to profit and success but after the bubble crisis, some potential buyers have been afraid to act. If you have been sitting on the side-line waiting for the next buying opportunity, here are 5 reasons why now might be the time to take the plunge:
Interest Rates Remain Low: Don\'t just think about the price of the house alone. If you purchase a median-priced home, every 1/2 point increase in interest results in an extra $1,000 annually for as long as you hold the loan.
Inflation Adjusted Prices are Lower than Ever: Nominal home prices have dropped 5, 10 or even as much as 25% from previous highs in most areas. When adjusted for inflation the savings are even greater.
Banking Regulations are Tightening: Recent economic indicators lead many to believe banks will tighten lending requirements by requiring larger down payments, stricter qualification guidelines and other restrictions. Even if interest rates remain low, it could become much more difficult to qualify for a mortgage in the future.
Rising Cost of Rent: Rental rates have been increasing with rate hikes expected for the next several years. During tough economic times, the ability to lock in price and control costs is important to maintaining a working budget.
Fabulous Foreclosures and Incentives: Special programs at the state, local and federal level are able to assist investors and homeowners in purchasing foreclosures short sales, REOs, and other property through special programs and incentive packages. 1 August 2011 Searching for easy ways to spruce up your abode? Following are some ways to transform your home for less than $10.
Turn Your TV Into Art: Newer television sets can easily display family portraits, vacation photos or your favorite scenery with the touch of a button. Just upload to the gallery, add music if desired and enjoy.
Paint It Up: Add a splash of color to a boring old chair or bring new life to a table with bold bright colors.
Sign Your Name: Decorations don’t need to be expensive. Use a template or vinyl letters to showcase your favorite quote. Simply select a blank spot on the wall or furniture to instantly apply a thoughtful expression to your daily life
Stop to Smell the Roses: Bring a little of the outdoors inside with the creative use of flowers, grasses, leaves, pinecones or even rocks. They add interest and color to any décor.
Cover Up: Use old wrapping paper, string and ribbons to transform plain cardboard boxes into ultra-colorful organizers.
Soft Spots: Create soft spots with the help of a semitransparent scarf draped over a lamp, table or armchair. Use different colors to create ambiance.
Create Interest: Repurpose old jewelry, buttons and other knickknacks by adding interest to throw pillows, pull strings or other ordinary items around the home. Sew on or thread together using ribbons and lace. 25 July 2011 In a nutshell, Fannie Mae and Freddie Mac are intermediaries. They buy loans from lenders and then turn around and sell them to investors.
Most mortgages, regardless of the type, are originated with the expectation that they will be sold after they close.
Loans that are kept in-house are called portfolio loans. These loans are almost always adjustable rates and have more stringent guidelines than other mortgages because the owner of them is taking all of the responsibility and the risk of the borrowers defaulting on them.
When a loan that meets specific criteria closes, Fannie Mae or Freddie Mac buys it. The loan is then bundled with other similar loans and sold to investors as one security instrument.
The benefits to the lender are twofold.
First, the lender makes money on the mortgage, both in the origination of the loan, as in fees, and when the lender sells it to Fannie or Freddie. Second, when the lender sells the loan, it now has a new supply of money with which it can write new mortgages. Once a lender receives this new money, the cycle then repeats itself with the origination of more loans.
The benefit to investors is that they can buy thousands of loans that were originated to a specific set of guidelines and determine the level of risk that is suitable.
For example, they can specify whether a loan is for a fixed-rate or adjustable-rate and what equity a borrower must have. 18 July 2011 A mortgage escrow account can make it easier to budget because it works like a savings account. The money you deposit into your escrow account with each monthly payment is used to pay your property tax or insurance bill when they are due. In turn, you should never pay a bill for these items as long as you own your home and have the escrow account in place.
Lenders take a risk when they allow you to pay your own taxes and insurance. If you default on your mortgage payment, you are also defaulting on the money that goes into the mortgage escrow account.
Federal Housing Administration borrowers have no choice but to have escrows included in their mortgage payment. Borrowers of conventional mortgages, as in those insured by Fannie Mae and Freddie Mac, don’t have to escrow if they put at least 20% down.
The Real Estate Settlement and Procedures Act requires your mortgage servicer to help you maintain a minimum balance in your account that allows for a 1 – 2 month buffer to accommodate increases in property taxes and home owners insurance. It’s for that reason an escrow analysis is used to adjust your mortgage payment each year.11 July 2011
The HomePath program has been getting a lot of attention lately. So what is it, and what can it do for you?
HomePath is a website owned by Fannie Mae that shows properties that have been foreclosed on and taken back from the owners. These are often referred to as real estate owned (REO) properties.
These properties can be in very good shape or in need of major repairs. They are often heavily discounted in price. Keep in mind, though, that whatever their condition, they are all sold as is.
Some disclosures state that anything needing attention once the closing is complete is on the shoulders of the buyer. In other words, once you own it, you own it. On the financing end, the good news is that for those who qualify, and many people do, there is no mortgage insurance required, even with down payments as low as 3.5%.
There are also no appraisals or surveys required, meaning that closing costs are lower than they would be on a traditional mortgage, as these items can cost $300 to $500 each. The mortgage rate will be slightly higher on a HomePath loan than on a traditional mortgage. That’s because Fannie Mae charges a premium to offset the fact that there is no mortgage insurance.
Plan on allowing 30 days to get to the closing table once you apply. HomePath loans are considered specialty products, and while they don’t need to go to Fannie Mae to get approved, I am one of the few lenders that actually handles these types of mortgages.
For more information on HomePath, visit www.HomePath.com. 10 July 2011
So, you're about making home improvements. Congratulations! While you're checking the Yellow Pages for architects and thinking about digging out the basement, don't forget the most important people of all: your neighbors. That's right. You'll be competing with when it comes time to sell your home.
About the level of finish: put thought into the level of finish you will put into your home improvements. Homeowners are often dismayed to learn that the fixtures, hardwood floors and soaring ceilings are just too rich for their neighborhood or the size of their home. When it comes time to sell, they won't recover the cost of granite countertops and maple floors, because the buyers who are willing to pay for that level of finish and quality won't normally be looking in your neighborhood.
About major renovations: look at it this way. If a major renovation will make yours the most expensive house on the block, you may never recoup your costs when you sell. But if your house is the neighborhood embarrassment and you want to bring it in line with its fellows, then a major renovation is the way to go.
Before you begin any work, talk to your neighbors, your friends, and a local realtor about the kinds of changes happening in the area. Even better, take the dog for a long walk and check what other people are doing to their houses. Have recently purchased properties been razed to make way for monster houses? Are your neighbors making tasteful additions that expand their living space? If so, GO FOR IT. If not, think twice.
A wise man once suggested that if you buy a poor house on a good street, you're making a great investment. But if you buy a great house in a poor neighborhood, well, not so much.
Keep the neighbors in mind when you're planning your renovation and you'll make the right decision not only for now, but also for the future. If you have questions or ideas about financing your home improvements, before you do anything, give me a call to discuss the numbers at 472-2272.
9 July 2011 Pay Down Your Credit Card Debt the Smart Way!
Yes, that unassuming piece of plastic can fulfill your fondest dreams — and then turn them into nightmares when you have difficulty paying them off.
Get your cards in order and out of your life. Here’s how.
Step #1 Stop using them. Take them out of your wallet or purse and put them in a safe place.
Steps #2 quickly pay off your credit cards by following the proven strategy:
A. Write down the interest rate, balance, and minimum payment for each card.
B. Arrange this information according to the interest rate — highest to lowest.
C. Each month, continue to pay the minimum for each card except the one with the highest interest rate. For that one, pay whatever extra you can reasonably afford. Repeat until the balance is gone.
D. Now get to work on the card with the second-highest interest rate. Add the amount you used to pay for the first card to the minimum payment of the second card, and make that the new monthly payment amount. Repeat until that balance is gone.
E. Move on to debt #3 etc…
Feel the relief
When credit cards are finally gone, you’ll be able to save money and even pay for things with cash! 9 July 2011
Should You Refinance Your Mortgage
The U.S. homeowner refinances his or her mortgage about every four years. The reasons to refinance are many but always to save money somehow some way. Here are some reasons to refinance you might consider:
Do you have an Adjustable Rate Mortgage (ARM)?
You might want to refinance to lock in a low fixed rate mortgage before interest rates rise. By locking in, you won’t have to worry about your payments climbing in the future.
Is your monthly payment straining your budget?
You may want to consider refinancing to lower your monthly payment. Even if rates are the same as when you obtained your current mortgage, you may want to refinance to extend the term of your loan if you’re having difficulty meeting your monthly payments.
Has your credit rating improved?
If your credit score was poor when you got your current mortgage, a better credit score might score you a lower interest rate and a lower payment.
Do you have a lot of debt?
If you have equity in your home, but a lot of installment and revolving debt, consider a cash-out refinance. The extra cash you get from a larger mortgage can be used to pay off other higher interest rate debt and lower your total monthly debt load
Do you need money for a major expense?
Cash-out refinancing isn’t just for consolidating debt. If you have available equity in your home, it may enable you to undertake some major home improvements, or to free up money for your children’s education.
If you’re considering a refinance, check out the refinance video on my website: CharleyFarleyHomeLoans.com or give me a call to discuss what you choices will be and how much money you can save. 2 June 2011 Do you hate paying your mortgage? Maybe not but let’s face it: given the choice, you’d rather not pay one. If you could find an easy way to get rid of your mortgage and your other debt, you’d do it. Right? That is why “Mortgage Elimination” and “Debt Elimination” scams work: because the scammers are telling you something you want to hear and they make it sound easy – real easy if you’re already having difficulty paying your mortgage.
Most of these scammers have similar modus operandi. First, they come up with a bunch of untrue and wild theories about why the homeowner’s current debt obligations are not valid. According to the Office of the Comptroller of the Currency: The homeowner is then coached in to signing a worthless instrument entitled “Bond for Discharge of Debt”, “Bill of Exchange”, “Due Bill”, “Redemption Certificate”, or other similarly titled documents in an effort to eliminate legitimate debts. Regardless of how such instruments or documents are titled or whether they appear authentic, they are worthless. You would be wise to be particularly suspicious of e-mail or web-based advertisements that promote the elimination of mortgage loans, credit card and other debts, while requesting an upfront fee to prepare documents to satisfy the debt. 2 June 2011 With the record-low interest rate environment that we find ourselves in these days, adjustable rate mortgages (ARMs) seem to be more attractive than ever. After all, ARMs often have lower rates than their fixed rate counterparts. However, there are a few things homeowners should take into consideration before getting into any ARM even if it’s just a Home Equity Line of Credit.
The First Thing
ARMs have a fixed period in the beginning of the loan: it’s as short as 1 month
The lower-rate mortgages are usually the ones with the shorter initial terms.
Rates will fluctuate with indices such as Treasury bills, or the London Inter-Bank Offer Rate (LIBOR), which is the interest rate that banks charge each other for loans or the Prime Rate which fluctuates monthly.
Not all ARM’s have what are called floors and ceilings.
Here is my advice: It’s okay to get a 5-1 program (locked for 5 years before converting to a 1 year adjustable) if you’re not going to have the mortgage 5 years from now. Home Equity Lines of Credit are also ARM’s but can be a good solution if the amount you’re borrowing is so small that a big increase in interest rate wouldn’t affect your total monthly debt load enough to matter. Generally, you want to make sure your interest rate is guaranteed through the period of time you’re going to owe the money. 15 May 2011
Remember that house you wanted a couple of years back but couldn’t afford?
Well, with the current housing market having turned in favor of buyers, now might be a very good time to take another look at possibly purchasing that property. There is a drawback, though. The other side of the coin is that credit terms have been tightened to prevent another housing market meltdown like the one we went through recently.
Understanding your credit score is the key to taking advantage of today’s situation. Mortgage lenders pull data from three credit bureaus: TransUnion, Equifax, and Experian. Each bureau provides a score, and lenders use the average of the three scores to help determine whether they will let you borrow money. Each bureau uses a similar scoring model.
The two biggest factors that influence the score are recent late payments and debt-to-limit ratios.
Recent Late Payments
If you are late on payments with your existing debt, why in the world would a lender want to step up to the plate and give you more credit?
If a buyer has a legitimate reason or explanation as to how such a situation occurred and why it is unlikely to happen again, it will likely go a long way toward getting a mortgage approved.
Debt-to-Limit Ratios
The debt-to-limit ratio is a comparison of how much you owe compared to how much you have available on a given line of credit.
Too many maxed-out credit cards will give a lender the impression that you are overextended and that you may need to pay down some debt prior to getting more credit. Maxed-out cards also tend to lower your credit score. 2 May 2011 According to Barry Chisholm of Protection One, a 18 year veteran of the home security industry, there are a number of things you can do to make your home safer that cost very little. Here are his top 5 suggestions for the outside:
1)Install reflective address numbers in a visible location on the front of your home. This makes it easy for emergency personnel to locate your home.
2)Prune bushes away from first floor windows to eliminate hiding points.
3)Install gravel in the pathways near or around bedroom windows, the sound of the footsteps on the gravel may alert you to an unwanted guest.
4)don't leave ladders around the outside of the home secure them inside the garage or chain them up outside the home.
5)Add motion activated lighting on the property to ward off unwanted nighttime guests.
After a neighbor was recently vandalized, I had Barry do a basic security audit. The declining cost of electronics has made home security systems very inexpensive and he was able to design a basic system that only costs me a few hundred dollars to install. I now recommend Barry perform a security audit for everyone who feels a locked door just isn’t enough. You can reach Barry Chisholm at 860-2670. 2 May 2011 It’s no secret there will be fallout from the generally poor economic environment we’ve all lived through over the past few years. Foreclosures and Bankruptcies are common and we’ve all heard stories of folks who were better off after declaring bankruptcy as evidenced by their purchase of a new home. So what is the real deal when buying a new home after a foreclosures and bankruptcy you ask? It’s no longer as easy to do as it once was.
A foreclosure iswhen the lender takes the property from you to resell and satisfy your debt.
A deed in lieu is where - instead of going through the foreclosure process - the owner agrees to give back the property to the lender in exchange for keeping a foreclosure off of their credit report
A short sales is where the borrower finds a buyer for the property and the bank agrees to settle for less than the full amount owed.
The FHA is generally looking for three years from the completion date of these events before a purchaser can buy again. With conventional financing it is five years.
Bankruptcies
There are two types of bankruptcies that people can go through, regardless if they own a home. They are Chapter 7 and Chapter 13. In Chapter 7, debt is wiped clean from the record. In Chapter 13, some type of payment plan is put into place to repay the debt
Conventional lenders will look at finances for at least four years after the dismissal date of either type of bankruptcy, while the FHA will look at two. Both depend on you having a solid credit history since the bankruptcy.
Some FHA borrowers with a Chapter 13 bankruptcy may be able to get a mortgage if they can prove to the lender, via the court system, that payments have been made in a satisfactory manner for a minimum of 12 months. 15 April 2011 With all the talk these days about mortgage insurance (PMI/MIP), now may be a good time to understand what it is and how it works. Let’s face it: even if you’re putting less than 20% down, you still want the lowest rate possible. Even with as little as 5% down, you can still get a great interest rate if you agree to pay mortgage insurance. The insurance makes up for the risk associated with your low down payment loan by protecting your mortgage lender from default.
Bottom line: Mortgage Insurance is something you pay for to protect your lender. Obviously it is much different than homeowners/hazard insurance which insures the property against fire, theft, liability, etc...
Conventional Loans
All conventional loans where the loan-to-value ratio is greater than 80% will require some type of mortgage insurance. The cost of the mortgage insurance will vary depending upon the loan-to-value ratio, credit score, debt to income ratio, etc... Keeping mortgage insurance costs to a minimum is a big part of choosing the best possible finance program.
Refinancing:
Existing homeowners, who had at least 20% equity when they got their current mortgage, may not have it now. Here is the bad news: The benefit of refinancing to a lower rate may be offset by the additional cost of required PMI. Here is the good news: You may have a Fannie Mae or Freddie Mac mortgage designed for these circumstances where mortgage insurance can remain off the loan. I this sounds like you, feel free to give me a call to discuss the options.
FHA Loans
FHA loans have two types of mortgage insurance associated. The first is called the upfront mortgage insurance premium. This fee can be financed and is now 1% of the base loan amount. If you borrow $100,000, your loan will carry a premium of $1,000, making the amount you borrow $101,000. Then you will still have a monthly mortgage insurance premium. A 30-year, $100,000 loan would have a monthly mortgage insurance payment of $75. This is calculated by multiplying the loan amount of $100,000 by .009 and then dividing by 12. Some FHA 15-year mortgages have the monthly mortgage insurance waived.
Charley 28 March 2011 If you’ve been thinking of purchasing or refinancing a home that is in need of repairs, the Federal Housing Administration (FHA) 203(k) rehab loan might be for you. There are two types of 203(k) mortgages: streamlined and standard. The streamlined version is for smaller projects and is a less-involved process.
Whether it’s for a Purchase or Refinance transaction the meat of the finance process starts with contractor estimates for a streamline K loan or a FHA consultant report for a standard K loan. An appraisal is then used to determine if the “after improved value” is great enough to support the cost of the repairs on top of the purchase price or, in the case of a refinance, what is currently owed on the home.
In addition to making sure your project is financially viable, other due diligence is done to ensure your success. It’s customary for us to check your contractor’s credentials, work experience, licensing info, type of worked performed, experience, and client references.
The lender needs to know the work is getting done by qualified people and that the draws that the lender sends are being used for their intended purposes. In most circumstances, third parties must be doing the work, as opposed to you or people you know in the trades. Draws are given out at certain points in the process, and some money is withheld until the end to make sure all the work is done.
There are additional expenses associated with renovation loans so they are best utilized for circumstances when significant repairs are required – not just incidentals. If you’re considering the purchase or “refi ”of a property that needs repair, call me to discuss a K loan and other rehab finance programs at 472-2272. 15 March 2011 Everyone wants to refinance but not everyone can. With property values down by more than 30% from the peak, many homeowners don’t have enough (or any) equity to refinance unless they have a FHA loan.
An FHA streamline refinance refers to a refinance of an existing FHA loan into another FHA loan, with streamlined or limited documentation. The main difference between a FHA streamline refinance and other refinance programs is that, in certain circumstances, no appraisal is required, regardless of the current market value of your home.
There are limitations. The new mortgage cannot be greater than the amount you owe now. This means that no closing costs may be rolled into the loan. There are other requirements to getting a FHA streamline refinancing but if you have an FHA loan now and have an interest rate in the 5’s, you should call me to discuss how much a streamline “refi ”will save you.
Charley
472-2272 15 March 2011 With a strong rental market and historically low mortgage rates, the opportunities for purchasing rental properties in the current market are unprecedented. You can purchase an investment property for one of two reasons. The first is to repair and then resell the property. The second is to rent out the property for the income stream – Yeah, rental properties really cash-flow right now.
In either case, you need to make sure your numbers work on paper before doing it for real. This means getting input from outside experts such as your real estate agents, contractors, and me: your mortgage lender. We can provide you with the information you need to make a good business decision.
A couple things I can share with you now: Plan on putting a minimum of 25% down on any rental investment property. The low down payment programs are for Owner Occupied rental properties. Any late mortgage payments in the prior 12 months, or bankruptcies in the previous seven years, will make it very difficult to secure financing.
You can plan on paying a higher interest rate on financing for investment property. As far as assets go, we’ll also be looking for six months of mortgage payments, including taxes and property insurance, in reserve. . This may be in the form of a checking or savings account, or a percentage of some type of retirement account such as a 401(k). If you want to run the numbers or do a cash flow analysis on a rental property before making an offer, feel to give me a call at 472-2272.
Charley 28 February 2011 There are an abundance of properties on the market in some form of distress including “Short Sales”. Sometimes a property owner is unable to make payments but can’t sell their home because they owe more on it than it’s worth. They can avoid foreclosure by getting their lender to agree to settle for less than the full amount owed: It’s called a short sale. These situations often offer amazing opportunities to purchase a home, but knowing what to expect will insure your success and make the process go more smoothly.
Here is the most important thing you need to know: These transactions almost always take longer than the traditional 45 days to complete. Depending on the volume of distressed properties that the lender is dealing with, even getting an answer on your initial offer may take several weeks to several months. Lenders often wait to decide on your offer in hopes of receiving multiple offers. Obviously it’s not a good idea to give notice to your landlord until the short sale is fully approved by the bank
Financing a short sale property is just like financing any other property: It still has to meet normal lending requirement for structural soundness, value, safety, marketability etc… A good real estate agent will help you identify property issues that might make financing a problem and address those issues ahead of time as part of your offer. If you want to know more about short sales or want a referral to a realtor who specializes in them, feel free to call me at 472-2272.
Charley 15 February 2011 It’s more important than ever to have a good credit score. Whether for a new credit card, auto loan, or a home loan, banks now have more conservative lending standards including higher credit score requirements Borrowers with the best scores qualify for the best rates and, in turn, they have the lowest payments. Your credit rating can affect more than just your ability to borrow and the rate you pay: A low credit rating can increase the cost of your auto and homeowners insurance.
The three credit bureaus - TransUnion, Equifax and Experian - use scoring models to rank you from a credit perspective. They pull information from places such as credit card companies and car loan companies to determine how much debt you have and how well you’re able to manage that debt.
Your credit score is most heavily weighted on your payment history going back several years. This payment history provides prospective lenders with some measure of your ability to manage your finances and some reassurance you’ll pay them back in a timely manner.
The next biggest factor in determining your credit score would be the ratio of your credit card balances to your available line of credit. Ideally, you want to keep low credit card balances: 50% of the high credit or less. If your credit card balances are maxed out you no longer have available lines of credit as a financial safety net. Your high credit card balances also give prospective lenders concern that you are already overextended: Your credit score will suffer. 28 January 2011 The QE-2 is going to take you places you’ve never been. I’m not talking about the cruise liner: I’m talking about Quantitative Easing part two. This is where the Fed is buying Treasuries. If you think this sound like our government is robbing Peter to pay Paul, you’re on the right track. The FED is purchasing treasuries with money it doesn’t have. It easy to do when you are the government: you print more money. The plan is for the FED to force other bond market investors to bid more competitively against the FED whereby they would all settle for a lower rate of return which would translate into lower interest rates for the consumer. This sounds good so far. Right?
There is another intended benefit to the QE-2: stimulus. The FED is hoping this additional money supply will stimulate the economy and move the unemployment numbers back down. This is like a 2 for the price of 1 deal: lower interest rates and stronger economy out of QE-2 alone! This is exciting! Are you catching my sarcasm?
The proverbial fly in the ointment is inflation. QE-2 started on the 2nd week of November by causing rates to go UP. “What” you say? You heard me right: rates went up because bond market investors are concerned QE-2 is going to cause inflation. Here’s why: QE-2 is fundamentally a method for the FED to devalue our currency which is inherently inflationary.
Rates are still near their record lows and are expected to stay low in the short term (as measured in months). In the long term (as measured in years) I expect interest rates to rise significantly.
Bottom Line: If you’re thinking of purchasing a home or refinancing one, now is a good time while rates are still low.
Charley 1 December 2010 In the big picture of lending, loans given to consumers fall into short-term loans and long-term loans.
Short-term loans are generally considered consumer loans that have terms of 5 years or less. They would include revolving credit cards, installment automobile loans and home equity lines of credit. The rates on these loans are based on what is called the Prime Rate, the rate that banks use to lend money to one another. Whether the rates on these instruments remain fixed or fluctuate over time, they are at some point determined by the Prime Rate.
Long-term loans are generally for more than 5 years and would be most often associated with 10 to 30 year mortgages. These are primarily fixed rate mortgages that historically followed the yield on the 10-year Treasury bill which tends to change with economic conditions that are affected by inflation. 15 November 2010
USDA Rural Development Program
The RD program is a $0 down program and very affordable Mortgage Insurance. Here’s the catch: There are income limits and many of our more densely populated towns are disqualified.
VA Loans
The Veteran’s administration program requires $0 down and has very affordable closing costs. It’s arguably the bestFirst Time Home Buyer program and you can use you entitlement over and over again. If you served your country in the Armed Services, you’ve earned it!
Federal Housing Administration (FHA) and conventional financing loans are undoubtedly the most common ways of getting money to purchase a home.
FHA Loans
An FHA loan is for you if you have minimum savings or if you’re “credit-challenged” (trying to be politically correct), or both. The minimum down payment is just 3.5% and you can have a credit score as low as 620.
The drawback to an FHA loan is that mortgage insurance premiums which you don’t have to pay if you put more down and qualify for a conventional loan.
Conventional Loans
Conventional loans are typically for borrowers who have more money to put down on a home and have better credit scores.
Although the guidelines allow for as little as 5% down, as a practical matter, Conventional programs work best with at least 10% or more down. You should also provide some evidence you have two months of asset reserves for mortgage, taxes and property insurance. 30 October 2010 Prequalified, Preapproved and a Commitment Letter are 3 important terms you’ll hear when it comes to seeking a mortgage.
Prequalification
The first step in the home buying process is a pre-qualification. It takes 15 minutes and involves answering a few quick questions about your income and your debts
At this point, the lender takes your word that everything you state is correct and offers you an opinion on what you’ll be able to afford each month and what programs might work best for you.
Preapproval
A pre-approval is more involved. A credit check is run, some basic documentation is gathered. The information provided is put through an automated underwriting system to secure an electronic approval.
At this point in the process, you’ll be issued a pre-approval letter that confirms how much you are qualified for. This letter will be attached to any offer you make on a property to reassure the Seller you have the ability to perform on the agreement.
Commitment Letter
Lenders issue a conditional commitment letter between the contract date and the closing date. We look to issue the commitment soon after the appraisal is underwritten and all other approval conditions are satisfied. The next step in the process is hiring the movers! J 10 October 2010 “Home sales and median sale prices are increasing in nearly every New Hampshire county”. according to Peter Francese. Doesn’t that sound GREAT?
Let’s read between the lines and put into perspective what this means to you and I: It means a greater number of homes have transferred or sold from one party to the next “I like that.” This also tells us the homes that are selling are no longer the lowest possible priced entry level homes like some condo’s “I like that too.”
This is all good news but it does not mean our home values are rising again. I will agree we are seeing signs of the decline in property values slowing, which is a positive sign. We are arguably seeing a firming up in value which is an even better sign. What we haven’t seen is any appreciation in property value. “I can’t wait to share that headline with you.” 30 September 2010 As the summer of 2010 fades off into the distance you may be thinking about your credit card bills, the expense of a fall house project or a way to save money before the winter fuel bills and cost of Christmas gift giving takes hold. You could do a cash-out refinance, lower your current interest rate and lower your monthly debt. If refinancing doesn’t make sense because you already have a really great interest rate, consider an equity line.
An equity line of credit is a perfect solution if you only need to borrow $10 – $30K and you are confident you can get it paid off in the next 5 years or so. The cost of securing an equity line is relatively cheap: a few hundred dollars at the most. The interest rate on an equity line of credit is a function of the prime lending rate which is very low right now. Here’s the catch: The prime rate can change monthly and you’ll want to pay down the equity line quickly in the coming years so you don’t get caught with a high balance when the rates start to climb again. 10 September 2010 In early August, Freddie Mac announced the lowest average interest rates since1971. Stating the average 30 year fixed rate was just under 4.5% and the average 15 year fixed rate was just under 4%. Yeah it is a great time to refinance! Refer to the chart below to decide or use my online tools to help you calculate your savings at www.CharleyFarleyHomeLoans.com 17 August 2010 Savvy home buyers are cashing in on the new and improved homebuyer tax credit worth up to $8,000 for First Time Home Buyers. A $6,500 tax credit is available to qualified existing Home Sellers who are purchasing a new home. This tax incentive is fueling the Real Estate Recovery which is great for the entire economy. Get more detail on your qualifications at the Internal Revenue Service (IRS),. 17 August 2010 Your credit score affects the interest rates you pay on credit cards, auto loans, and mortgages. It can even affect your insurance rates. Here are two of the major contributing factors that make up a credit score:
Balances Versus Limits: Keeping balances as low as possible, ideally under 50% of the high credit limit on a credit card and other trade lines, will help keep scores high. Having a balance that is very close to the limit will cause scores to drop. Let your balance climb over the high credit limit and your credit score will pay the price and then so will you.
Recent History: Making your monthly payments on time is the most important factor in getting and keeping a good credit score. The most recent 12 – 24 months is the most important period of your credit history.
If you have concerns about your credit history, check out my video on Credit or give me a call for an over the phone consultation - here in New Hampshire at 472-2272 17 August 2010 With fixed rate mortgages at record lows, Refinancing is all the rage. Refinancing starts with making sure a refinance is right for you. Here are some good Reasons to Refinance
— Lower your monthly payment with a lower interest rate.
— Get a lower rate and pay off your mortgage sooner.
— Drop PMI or consolidate your first and second mortgage.
— Get out of debt faster by consolidating debt.
— Make home improvements.
The Process
Refinancing is similar to when you purchased the home only easier and less expensive.
1) Start by contacting me to discuss how much refinancing will save you.
2) You apply for the mortgage of your choice (takes 1/2 hour)
3) We often need an updated appraisal (takes a week or two)
4) Your loan gets approved and you go to a closing (takes 1/2 to 3/4 hour)
5) You skip a payment and start paying the new mortgage the following month.
Get an interest rate quote and use my online Savings Calculator under the “Refinance” tab or feel free to just give me a call at 472-2272 17 August 2010
New Hampshire Housing Cash Assistance Program is being revised. It provides for 2% of the purchase price toward your Down Payment, Closing Costs, or Prepaid Expenses. You’ll need to meet the requirements for the program including the income limits, Purchase price limits, and you must contribute 1% of your own funds to the transaction. If you think the Cash Assistance Program can help you purchase a home, call me to discuss your qualification and other financing strategies at 472-2272. 17 August 2010
With mortgage rates still bouncing around near historic lows and the economy showing signs, albeit small ones, of a recovery, I expect both fixed and adjustable rates to climb higher in the future. Not everyone should be considering a refinance at this time but some should. Consider refinancing if you can save enough money to justify the expense (try using the Refinance calculator on my website) or if you have an adjustable rate mortgage. Adjustable rate mortgages (ARMs) are tied to economic-related indices, such as Treasury rates, the Libor, and the Prime rate which most home equity lines are tied to. These indices, which are used to set the ARM rates, are low at this time but I’m expecting them to climb and cause your ARM rate to climb accordingly. If you wait, you’ll still be able to refinance to a fixed rate in the future but you should expect those rates to be higher as well. If you have questions about refinancing check out my new refinance video at CharleyFarleyHomeLoans.com. Click on the Refinance tab, watch the 2 minute video and use the calculator to determine your savings. 17 August 2010
The Federal Open Market Committee announced this week that it is not going to raise the FED or Discount Rate. Yippee!
Rates are still near record lows and entry level homes here in New Hampshire continue to sell at a health rate. It’s good to be a First Time Home Buyer: low interest rates, affordable home prices and maybe an $8,000 tax credit.
The FED believes “the economy is strengthening and the deterioration in the labor market is abating”. I think this means people are still losing their jobs but the rate of job loss is not as great. Emm… so the news is still bad but not as bad as it has been? Thankfully the employment news here in New Hampshire is much rosier than the national averages. 17 August 2010 The value of homes being bought and sold every day continue to define the value of your home going forward. 17 August 2010 The New Hampshire Housing Finance Authority (NHHFA) had their annual Awards luncheon on Wednesday March 24th. At the luncheon it was announced that I was ranked #6 in the State of New Hampshire for the NHHFA Single Family program. The NHHFA is a tax exempt public benefit corporation that administers a broad range of programs designed to assist low and moderate income persons and families to obtain decent, safe and affordable housing. I provide a whole host of government finance programs and the NHHFA programs have often been critical to the success of my home buyers. I am pleased to be partnered with Merrimack Mortgage and the NHHFA in providing so many home buyers with the most affordable financing for their new homes. 17 August 2010
We have new laws in 2010 to help prevent mortgage fraud by providing you with some additional information. I know what you’re thinking: "Charley already flooded me with more information than I could possibly absorb at the last closing." Sorry!
If they actually work the new laws will accomplish two things.
First, New Hampshire consumers should get even more accurate information at the time of application.
Secondly, New Hampshire consumers should get fees disclosed to them at application in such a way as to avoid surprises at the closing table because the closing costs quoted at application are expected to fall within certain tolerances at closing.
It’s true the costs can definitely go up in certain circumstances, such as in the case of rate spikes. What is new is: the change in costs must be disclosed to you in advance of closing so you can decide ahead of time whether or not to proceed.
Remember: the devil is always in the details. You might go to a higher rate for the benefit of lower closing costs. You can also get a lower rate by paying additional fees as long as they are property disclosed on the disclosure forms. My job is to give you the information so you can make the right finance choice for you and your family. 17 August 2010 With property values and interest rates at historical lows, now is the ideal time to consider the purchase of a rental property. Start by deciding if you want to buy something to fix up and sell right away or are you considering more of a long term investment. Maybe you’ll want to live in the property?
A good real estate agent can help in determining property values in a given location, with specific attributes such as parking, square footage and number of bedrooms, and what those properties would bear in a rental market as well.
Foreclosures, short sales and bank-owned real estate is a good place to start looking for properties, as they are often below market value. Keep in mind that they may need a bit of work. Either way, rental properties are priced particularly low at the moment.
If you plan on living in a 2-4 unit property, you could qualify for a FHA loan with as little as 3.5% down. If this is going to be a non-owner occupied property, plan on putting 25% down, and have six months worth of assets in the bank with which to make the payments. This is a bit steep, but lenders want to know that you are committed to making it work.
If you have questions or ideas you’d like to discuss about investment property, I have over 15 years of landlord experience to share. Feel free to call me at 471-9300 or email me at CharleyFarley@CharleyFarleyHomeLoans.com
|
|
|
|
|
|
Wherever you are from in New Hampshire I am here to help you with your purchase or refinance. If you are a first-time home buyer or looking for a new home for your growing family: I can help you! From Nashua to Lebanon, Keene to the Seacoast: I can help you! I am from Amherst and my office is in Bedford, I have been helping new buyers and home owners like you for over twenty years! Call me today!
|
|