Monthly Archives: April 2014

Mortgage Mistakes–And How To Avoid Them

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Out of all of a homeowner?s monthly expenses, the mortgage payment is often the largest. Many buyers (naturally) accept this fact, but because of this acceptance, many of them also don?t take the time to shop around or research in order to find the best deal. The result is that these homebuyers may end up paying more than they should for their home. Below we discuss some of the main mistakes that people make when looking for and taking out a mortgage, with the hopes that you will be able to avoid these pitfalls and save money too.

Mistake 1: Seeing loan rates that are advertised and thinking that that is what your rate will be

Loan rates that are advertised are the rock bottom rates, and, the thing is, the average person won?t typically be able to get these rates. You would basically need to have perfect credit in order to get the rates that are advertised, or you would have to put down a large amount of money in order to get close.

Lenders will go through every aspect of your credit looking for anything that could raise your rate, which puts you further from that lowest rate.

Mistake 2: Going with the first lender and not comparing them to others

Another big mistake people make too often is to not shop around. As with any other type of loan, the lender will only allow for certain rates to be given out, and some companies offer better rates than others? When you talk to a broker and are prequalified, the broker should begin to shop around for you to find the best deals from different lenders.

Mistake 3: Agreeing to terms you haven?t thoroughly read through

Make sure you carefully read through those terms!
Make sure you carefully read through those terms!

The rates that are advertised are not the rates you?ll be paying. Within the terms of your loan, the annual percentage rate, or APR, will be listed. This is the rate that you will be paying, and it often includes other fees.

Understanding the different terms of your loan can be difficult, especially since there are a number of fees that a lender may add to your mortgage. You should keep an eye out for processing fees, charges for pulling your credit, and charges for the appraisal.

Ensure that you read through all of the terms and ask what the different fees are for. You should also verify whether or not any of the fees can be reduced or possibly eliminated.

Mistake 4: Choosing to wait for a lower rate

Some people believe that it?s a good idea to hold out for the lowest possible rate. But no?this is not a good idea. This mistake can come with consequences that may include losing out on the home upon which your heart is set. It?s also important to remember that no matter what rate you get, you still will have to spend thousands of dollars on just the interest before you begin to gain any equity.

Don?t worry so much about the rate now. If rates begin to drop years down the road, you can also always refinance.

If you wait too long for rates to go down, your dream home may not wait around for you.
If you wait too long for rates to go down, your dream home may not wait around for you.

Mistake 5: Choosing a loan that isn?t right for you?

When choosing your loan, you should consider the conditions of the market and the number of years you?re planning on living in your home. You should not choose your loan solely based on the cost of the home you?re planning to buy.

The way the market is now, the most favorable type of loan is the fixed-rate loan. With one of these, you won?t have to worry about the state of the market. But this is also typically not the best kind of loan to be taken out by those who won?t be in the home for at least five years, as it often takes at least five years to begin to get your closing costs back in equity.

Finding the best mortgage for you can be tricky, but by putting in a little extra consideration and effort, you should be able to find one that will help you accomplish your goals while avoiding the mortgage mistakes discussed above.

Tips to Make Sure Your Home Improvements Don’t Backfire When You Sell

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Purchasing a home can be an exciting time, and that excitement often continues once you?ve moved in. Whether you choose to install a custom vanity in the bathroom or to add an in-ground pool to your backyard, it?s usually downright fun to customize your home to meet your specific tastes and needs.

However, once you?re ready to sell you home and move on to something different, you may be expecting to get your money back for all of the time and funds you spent to improve your home. Many homeowners actually assume that the improvements they made will automatically result in a higher asking price, but this is certainly not true of all renovation decisions.

In reality, your home is probably not worth what you paid for it or even how much you still owe on it. And if you try to set the asking price based on how much money you need to make, you?re setting yourself up for a boatload of frustration. A quality realtor, though, should be able to help you set an asking price based on neighborhood comps and other factual data that determine how much your property is actually worth.

When you move into your next home, keep the following tips in mind to make beautiful and wise improvements that don?t bite you when it?s time to sell.

1. Set Your Budget
Budgeting may not be the most enjoyable part of the improvement process, but it certainly is a vital first step. Before you start dreaming big and shopping, determine exactly how much you are able to spend on each project. Make sure to add at least 10% extra onto your budge to cover unexpected costs.

2. Make Wise Decisions
It?s fun to dream about a restaurant-quality kitchen or a master bathroom that feels like an upscale spa. In general, kitchen and bathroom renovations do offer the best bang for your buck, but it?s still important to stick to your budget and to choose neutral finishes that accommodate almost every taste.

Neutral renovations can help your home sell.
Neutral renovations can help your home sell.

3. Determine Your Priorities
Unless you?re dealing with an unlimited budget, you?re going to have to make some tough decisions about how you spend your funds. If cooking is your passion, you might have your heart set that line of appliances. But in order to accommodate this expense, it may be smart to go with less expensive kitchen cabinets and flooring.

4. Shop Smart
You can save big by searching more than one store before you make your purchases. Look for sales and special offers, and don?t be afraid to ask for discounts. In addition, scratch and dent or open box merchandise can offer great savings.

So, your home may not have the same value when you sell it as when you bought it. However, if you keep the tips discussed above in mind, hopefully you won’t be dealing with sunk costs come sale time–especially if you consider how the improvements you’ve made to your home may have positively impacted your life while living there.

Most of the time, a lot more than monetary value goes into home improvements
Most of the time, a lot more than monetary value goes into home improvements

The Daunting Bank Counteroffer!

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8-1Many homeowners are delighted to find an affordable home on a bank foreclosure list. They make a reasonable offer but are dismayed when the bank sends them back a counteroffer. This practice is all too common and is one that potential buyers should be aware of.

Understanding the Counteroffer
A bank?s counteroffer is similar to one from an individual buyer. The main difference is that a bank?s offer contains pages of fine print and clauses. It essentially voids the buyer?s initial offer and suggests news terms instead. Some of the main points are the price they are willing to accept for the home and if they will pay any closing fees. One of the most important items is the closing date they are imposing. Unlike individual sellers who usually come to a mutual agreement on a closing date, banks impose them. They will also charge buyers a fee if they don?t close by that date.

Buyers Beware
Banks are corporations and many have their own legal team. Buyers should read every word of an offer to ensure that the bank hasn?t completely changed the terms of the initial agreement. Many buyers look only for the price and skip the rest, which is a big mistake. Bank offers often contain terms that are not in the best benefit of the buyer. Some may restrict the type of loan a buyer can get. This may disqualify the buyer from obtaining low or no interest loans. In addition, banks may require that buyers get pre-certified with them as a way to obtain more personal information.

Items that Banks Won?t Pay For
There are some other red flags to look for when buying a home from a bank. The offer may include a number of pages that protect the bank from anything that is wrong with the house. If the home has a mold problem or a structural issue, the bank isn?t going to pay for it. In addition, many banks won?t pay to clear a home?s title. So, if the previous owner owed property taxes or homeowner association fees, there may be a lien on the house. In order to purchase it, someone must pay the money, but it won?t be the bank.

The Decision is Yours
Each buyer has to decide whether they can accept the terms of the bank?s offer. If a buyer does decide to accept it, they should have the document carefully reviewed by a qualified real estate professional first. Remember that the document is binding and can?t be undone.

Even When It Seems Hopeless, It’s Still Possible To Buy A Home!

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Many people?you may be one of them?have a dream of buying a home, but they simply don’t know how they?ll be able to get a payment scraped together or how they can ensure their credit rating will be high enough to qualify for a loan. Fortunately, however, there are more options for people than you might initially realize.

Often, people think that they may not qualify for the options discussed below. However, with a little work put into certain key areas, coupled with patience, home ownership is well within more people?s grasp than you may think. The following areas are important to consider when taking home ownership from dream to reality.

With the right key moves, the dream can be within reach!

With the right key moves, the dream can be within reach!Credit

Credit is a huge issue for many people, and it also seems to require more patience than other factors. For instance, a person?s credit score may seem like something that you just can?t control. But understanding the way the process works can shine some more light on what you can do, and that?s incredibly important.

The three major credit-reporting bodies are Experian, TransUnion, and Equifax. It?s the median of the three reports that is generally used when applying for credit, and the higher the median score, the better. Usually, a score of around 620 is the base for getting accepted for FHA loans.

The key here is to know what?s on your report. By thoroughly going through your report, you may find important hidden errors to fix. It?s also important to fix or improve other personal finances when necessary. But make sure too that you work with a lending professional that is experienced in the field, because dealing with a credit report can often be too complex to do alone.

Don't despair!
Don’t despair!

Down Payment

Property isn?t cheap, and a down payment isn?t either. Conventional loans through financial institutions usually require somewhere around 5% of the sell price. But there are also FHA loans that are available for as low as 3.5%! Different states have different programs as well (all can be found listed on the U.S. Department of Housing and Rural Development website). Again, make sure you work with a lending professional that is knowledgeable about this area. Even no-down payment options are out there! Remember, the lender wants the house to sell too, so he or she should be in your corner.

Closing Costs

Closing costs are often just an afterthought for buyers, but they can actually amount to a substantial amount of money when all is said and done. Once again, working with the right lender can make all the difference here. Often, down payment funds can also work in your favor to be usable as closing cost funds as well.

So, to conclude, there are a lot of ways to make this work out, but the most important consideration for any buyer to make is to choose your lender wisely. Run, don?t walk from any lender that isn?t willing to help you find assistance or who isn?t knowledgeable themselves. Getting the right help you need can be invaluable when you want to buy a home.