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Who is Your Champion?

August 5, 2015 By

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The Super Bowl and World Series determine the football and baseball champions. Since there can only be one champion, the other team loses the competition. In feudal times, a knight might champion for the king or a patriotic, romantic or religious cause.

Fierce competition can occur when buying or selling a home because each party wants to get the “best deal” possible. When the buyer and seller are not equally matched, and they rarely are, it is important to have a champion on your side to fight for your cause.

The price of the home, the type of financing and concessions, personal property, closing dates and possession are just a few of the many things that can be negotiated in a contract. Since the seller wants to get the most for their house and the buyer wants to pay the least, their causes are diametrically opposed.

Even after the contract is signed, removing the contingencies can cause considerable negotiations. The inspections or the appraisal could be the source of reevaluating the terms and provisions of the contract.

Negotiating the sale or purchase of a home is definitely a competition and you need a champion on your side.

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It’s Hard to Imagine

August 5, 2015 By

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With mortgage rates below 5% since 2009, you’d think any homeowner who should refinance would have already. However, it is estimated, there are approximately 6.5 million borrowers who would benefit with significant monthly savings by refinancing.

Rodney Anderson of Supreme Lending, on his weekly radio program, described a recent pipeline meeting where they reviewed every pending mortgage application his company was processing. They had seven refinancing applicants whose current mortgage was over 9% and twelve with a rate between 7% and 9%.

“Some 550,000 American homeowners with a mortgage could save $500 or more each month by refinancing at today’s rates. Over three million could save at least $200 per month.” said Ben Graboske, CTO with Black Knight Financial Services.

Getting a lower interest rate should be reason enough but eliminating the mortgage insurance should make the decision a no brainer. With increased home values, the loan-to-value ratio may no longer require mortgage insurance which would add additional savings.

Homeowners need solid information about what their home is worth and whether they’d benefit from refinancing. The most reliable solution is to talk with a qualified mortgage professional. The internet is a great place for generalized info but each person’s situation is unique.
Call if you’d like a recommendation of a trusted mortgage professional or would like to know what your home is worth.

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What’s Stopping You?

August 5, 2015 By

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The majority of tenants say they’d like to own a home but continue to pay rent and missing out on financial and emotional advantages. There seems to still be a lot of misinformation in the marketplace.

There are a number of programs for low or no down payment options. Veterans can get into a home with no down payment or closing costs. In qualifying areas, USDA has zero down payment programs. FHA requires 3.5% down payment and there are conventional programs for as little as 3% and 5% down.

People with credit issues need expert opinions about their specific situation. Borrowers with bankruptcies or foreclosures may be eligible to purchase again after certain periods of time. There are short-term fixes for some types of credit problems. There is an extended list of individual issues that a skilled mortgage professional may be able to overcome.

Most tenants realize considerably lower cost of housing by owning once the appreciation, amortization and tax savings are considered. The savings in the first year alone could easily be more than the down payment required.

Plug in your own numbers in a
Rent vs. Own to see what your real cost of housing may be. Contact us for a recommendation of a mortgage professional who can give you accurate information about your situation.

Rent vs Own InTouch 7-15.png

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Build Equity Faster

August 5, 2015 By

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Equity is an asset and an appreciating home is an investment. While some people have resolved themselves that a mortgage payment is a normal part of life, others have set goals to get their home paid for as soon as possible. There are several strategies that will work but they all require persistent vigilance.

A shorter term mortgage such as 20, 15 or even 10 years will not only pay off sooner, it will generally have a lower interest rate. A recent comparison at Freddie Mac’s Primary Mortgage Market Survey showed a 30 year fixed-rate mortgage at 4.04% compared to a 15 year fixed-rate at 3.20%. The fees for the shorter term were even .1% less. The shorter term with the lower rate would have a higher payment but some people consider it forced savings.

Additional principal contributions to any length fixed-rate mortgage will save interest, build equity and shorten the term of the loan. Some homeowners may apply lump sums at various times during the year such as when bonuses are paid or a tax refund is received.

Other owners might increase their payment by $100, $200 or more each month. Setting the increased payment through electronic banking would insure that you consistently make the extra amount.

Bi-weekly payments make 26 half-payments in a year which equals 13 full-payments. Because of the frequency, it reduces the interest that is due. This might work well for borrowers who are paid every two weeks but could present cash flow problems for those who are paid on schedules that don’t coincide.

Making one extra payment a year will have almost the same effect as a bi-weekly payment. The 13th payment would be completely applied to principal.

Before embarking on one of these strategies, it would be wise to verify with your lender that it complies with their policies. Check out the
Equity Accelerator to see how it could affect your loan.

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Three M’s of Homeownership

July 10, 2015 By

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Among the many reasons people have to own home, they include having a place of their own, to raise a family and to share with friends. Additional benefits include security, investment, peace, pride and enjoyment.

Together with the benefits come the responsibility to take care of the home for its livability and viability as a sound decision. A homeowner’s concerns can be broken down into three areas.

The maintenance on the property is something that every homeowner deals with. Changing filters are easy to handle yourself. Other things might require a skilled professional but identifying the “right” one can be challenging.

Minimizing expenses can reduce the cost of living in the home. It’s good to recognize when a repair is appropriate compared to a replacement. Reputable and reasonable service providers are key to keeping expense low.

Managing debt and risk becomes the financial side of the effort. Taking advantage of low interest rates or shorter terms for refinancing, making additional principal contributions are just a few ways to manage debt. Home warranty programs and homeowner insurance tips can reduce risk.

We sincerely want to be a resource for you not only when you buy or sell but all of the years in between. It is actually the reason we send this newsletter to you.

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Eliminate Mortgage Insurance

July 10, 2015 By

Why would you consider refinancing if your mortgage is only two or three years old and the rate is not considerably higher than what is currently available on new loans? Because you may be able to eliminate the mortgage insurance and have significant monthly savings.graphic

Many homes have seen their values rise in the past few years. The current loan-to-value ratio may be low enough to no longer require mortgage insurance. In some cases, a homeowner might actually pay a little higher rate than they currently have but lower their monthly payment dramatically because the mortgage insurance isn’t required.

A rough rule of thumb is that mortgage insurance is not needed on loans at or less than 80% of value. There could be programs available that would allow a higher LTV than 80%.

Careful consideration should also be given to the fees required to refinance. Lenders differ in not only the rates they charge but also the fees associated with the loans and the process. If you’d like a recommendation of a trusted mortgage professional, we’d be happy to make a recommendation.

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Where Are the Sellers?

June 16, 2015 By

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Low inventories resulting in multiple offers are contributing to what experienced agents are calling the most challenging market they’ve ever worked. While buyers with resources may find the market difficult, purchasers with minimum cash and credit are struggling to find and get into a home.

First-time buyers feel the impetus to purchase because they’re renting and are concerned about being priced out of the market with rapidly appreciating prices and rising interest rates.

Sellers may not feel the same urgency because they already own a home. While they might find it appealing to change homes, they may not feel a pressing motivation causing them to act.

In some cases, sellers are so attached to their low interest rate mortgage that instead of selling, they’re keeping the home for a rental property. This may be a good investment for people with additional cash resources for the down payment and closing costs on the replacement property.

Why now is a good time to sell:

  1. The economy is strong.
  2. The majority of home sales occur in the months of May through September.
  3. Many buyers find it preferable to move in the summer because their children are out of school and they can avoid the winter weather.
  4. Mortgage rates are still very low but are starting to rise.
  5. Current low inventories in most markets result in higher prices and less competition.

Contact your real estate professional to evaluate the opportunities of making a move.

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Take Pictures Now

June 16, 2015 By

Home pictures

Preserve the memories you’re making by taking photographs of your home now. The pictures will remind you of the role your home played with your family and life.

Reminiscing is easier when scrolling through pictures to remind you of people and times. One of the least heard regrets is that we should have taken more pictures.

Shots to consider:

  • The front of the home from across the street
       
  • Times when your yard and plants looked exceptional
  • Holiday decorations
  • Special occasions in the homes like birthdays, anniversaries, graduations, etc.

    Home improvements
  • Major purchases for the home
  • Times when the home looked the best and the worst
  • Family, friends and pets in the home
  • Your children’s height marks on a door frame
  • The view from a favorite window

From an organizational standpoint, put the pictures in a folder with your address as the name. Even if you don’t take time to name each picture, you’ll have the file date to identify when it was taken. Since the cost of film and processing has disappeared, there is little reason not to chronicle your life in pictures.

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Make Your Offer Standout

June 3, 2015 By

Make your offer stand out graphic

If a seller was looking at two offers for exactly the same price on their home, there would still be things that could make one standout more than the other. If there happens to be more than two offers, things can really get sticky for a buyer. For that reason, it is good to craft the most attractive offer possible because even if you don’t have competition now, another offer could come in during negotiations and derail all your efforts to that point.

Anything that can give the seller the peace of mind that one contract will close on time and as agreed will make them more comfortable in accepting one offer over another. Buyers can consider putting up larger than customary amounts of earnest money and limiting the contingencies to only the most essential items.

The closing costs could be more expensive to the seller based on the type of mortgage a buyer is obtaining. One buyer may be asking the seller to pay part or all of their acquisition costs and the other buyer is paying their own costs.

The borrower who has a signed, preapproval letter will appear to have a greater certainty to closing than a buyer who only says they have talked to a loan officer. Some lenders’ letters are considered “gold” and others may not be worth the paper they’re written on. The seller will depend on their listing agent to advise them.

In most cases, the seller will be taking all or part of the cash they receive from the sale of their home and buying another one. If they have to put a contingency clause in the contract based on their current home selling, it weakens their position. Conversely, it will strengthen a buyer’s position if they don’t have to make their offer contingent upon selling their current home.

Even shortening the inspection periods and offering to close early or possible lease the home back to the seller for a short time can be valuable negotiating factors.

Finally, don’t overlook the value of a personal hand-written letter that tells the seller why you want their home. An emotional connection has been known to make a difference for one set of buyers getting the home.

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Who would want to be without one?

June 3, 2015 By

House umbrella graphic

When the 75 year old man who had been widowed four times was asked why he was getting married again, he said “for the little bit that they eat, I wouldn’t want to be without one.”

In a torrential rainfall, you wouldn’t want to be without an umbrella. It is also understandable that when purchasing or selling a home, more and more people want an agent involved.

NAR’s Homebuyers and Sellers Profile states the trend in owners trying to sell their home themselves has declined over the past ten years from 14% in 2003 to only 9% in 2014. Similarly, the number of buyers purchasing directly through an owner has decreased from 2001 to 2014 from 15% to 5%.

It is natural to think that a seller wants to get the highest price for their property while the buyer wants to pay the least possible. Negotiations may be the most valuable service provided by an agent because of the clear conflicts of interest such as the price, terms and condition.

Other areas of contention that could affect a party without an agent:

  • The real estate agent who represents the other party
  • The attorney who represents only one party
  • Home and pest inspectors regarding condition
  • The buyer’s lender regarding terms
  • The lender’s appraiser regarding value
  • The title company in an effort to satisfy challenges to clear title
  • Municipal authorities to mitigate code violations

 Even when there are two licensed agents involved, there could be a question of representation. This is a discussion that buyers should have with a real estate professional before looking at houses.

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