Potential home buyers have seen housing
more affordable now than at any other time in the past
30 years. Loan programs are available that include assistance
for the down payment, which is so often a stumbling block
for the first time buyer unable to save money due to high
rent payments. Also, lenders have relaxed some of the
qualifying ratios permitting borrowers to have a higher
debt to income ratio. Check with your local bank for a
pre-qualification loan approval, which will provide you
with a guideline to begin your home search. Home ownership
with its tax write-offs for interest and tax payments
and potential for equity building can be much more than
a stack of rent receipts.
Q.
REFINANCING?? - MAY BE YOUR KEY TO SAVING
MONEY
A.
The old rule of thumb is that it pays to refinance
if prevailing rates are at least two percentage points
below what you currently pay. But that doesn't take
into account whether you plan to stay in your home long
enough to recoup the cost of refinancing
Costs to consider - To figure out whether you can save
money, you'll need to consider three things: How much
lower your monthly payments will be, how much it will
cost to do the refinancing and how long you plan to
stay in the home.
When you talk to your lender, tell them what you paid
for your home, how much you will still owe and what
you are paying per month. Then ask them what products
they are offering and how much your monthly payments
would be on each.
To get the best idea of savings, have your lender itemize
all expenses involved. In addition to points (fixed
fees that can run from zero to four percent of the loan)
there are fees for application, title search, a credit
report, lawyers and other services. This can add up
to as much as 5% of the loan amount.
Length of Stay - After totaling the costs, you need
to determine how long you plan to stay in the home to
recoup what you have paid out to refinance. If you are
planning to stay in your home more than seven or eight
years, you'll probably want a fixed-rate loan. That
erases the uncertainty over how much the rates may rise
over the life of the loan. But if you expect to move
before then, consider either an adjustable-rate loan
or a balloon-reset loan.
Q.
Shopping for Home Loans
A.
Today there are many options for home loans. Lenders
are competing for your business and you owe it to yourself
to shop around for the best possible deal.
Begin your process by developing a list of possible
lenders. Talk to people who have recently purchased
homes as well as real estate professionals.
Ask each lender about mortgage options and rates. Nearly
every lender offers fixed-rate mortgages with 15 and
30 year terms. These loans offer monthly payments that
stay the some.
Most lenders also offer adjustable-rate mortgages (ARMs).
These loans provide a lower interest rate at the outset,
but the rate and your payment can change according to
economic conditions.
A third type of mortgage has a convertible adjustable
rate. This is an ARM with an option that allows you
to convert it to a fixed-rate mortgage after a certain
period. It offers the lower initial interest rate of
a standard ARM with the possibility of locking into
predictable payments later.
Balloon mortgages have a fixed interest rate and start
with fixed payments. After approximately five to seven
years, the mortgage ends with a single "balloon"
payment for the remaining principal. The term of the
mortgage is short so the interest paid is significantly
less.
In some cases you may qualify for special loans provided
by government organizations or financing programs available
through your lender.
Q.
Seeing With a Buyer's
Eye
A.
The best way to begin the process of selling a home
is to use a little role reversal. Take a tour of your
home with a real estate associate and observe it as
a buyer would. Remember -- people looking at your home
will be as critical as you'll be when your search for
a new home begins.
Preparing your home for the real estate market doesn't
have to mean costly additions or remodeling. In fact,
cleaning, painting and minor repairs may be all that
are necessary to make your home seem well cared for
and a better value than homes of comparable price.
Potential buyers want their new homes to be perfect.
It's the little things you don't even notice anymore
-- the chipped paint on the garage door, the overgrown
hedge or the burned-out entry light -- that can make
or break a sale.
First impressions count. The exterior of your house
is the first thing prospective buyers see so it's important
that your home has strong "curb appeal".
The key to successfully preparing the interior of your
home is to make sure it is clean and uncluttered. Don't
let dirt and lack of storage space overshadow your home's
positive selling points.
Most buyers will have their own ideas on major changes
for the house so you don't need to over-improve. Just
make sure undone minor repairs and improvements aren't
reasons for buyers to offer less than your asking price.
Q.
How can I protect my Investment in my
home?
A.
Protect your investment with a Home Warranty.
A home warranty will protect you against the unexpected
cost of repairing or replacing mechanical components
in your home which fail due to normal wear and tear.
Up to 12 months FREE listing coverage
13 months of coverage for the Buyer
Low $50 Deductible per failure
Choice of Contractor
24-hour Customer Service
Coverage includes: Heating and air conditioning
systems, roof leaks, water heater, appliances and
much more.
