Ways to Love Your Home

Posted by Laine Smith on 2/14/14 3:49 PM

Owning a home is a symbol of hard work and the American Dream. Over the years your home will provide comfort, happiness and security for you and your family. Whether you fell in love with your home the moment you stepped inside or are still in the midst of making changes to make it your own retreat, here are a few more ways to love and appreciate your home this year.

  1. Make a connection. It’s rare that your first home will be your “forever home”. The need to downsize, upsize, relocate to a new city, etc. is sometimes inevitable. Make connections to milestones that happen while you are living there, i.e. bringing a baby home, hosting holiday parties, accomplishing your first DIY project, etc.
  2. Contrast what makes your house home. What makes you look forward to walking in your front door at the end of the day? Reflect on the reasons your home is a retreat from the rest of the world.
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Benefits of a Mortgage Over Paying Cash

Posted by Laine Smith on 2/7/14 12:22 PM

Many people are wary of the financial responsibility that comes with financing a home purchase. If you have the cash, it may seem like a no-brainer to purchase your home outright, but this article will show that the bigger the mortgage and the longer you carry it, the more beneficial. 

One of the biggest benefits of carrying a mortgage is that a home loan is most likely the cheapest money you will ever borrow. By going forward with a mortgage, you can avoid tying up cash that could be used for more profitable ventures and options in case of a financial emergency.

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How Local Schools Affect Your Home Value

Posted by Laine Smith on 1/31/14 10:34 AM

When potential home buyers are seeking a new residence, several factors influence their purchase decision and willingness to pay a higher price for a home. Aesthetic features such as updated kitchens and bathrooms, open layouts and curb appeal can boost home value, but studies are showing that a certain non-visual aspect of a home’s location influence its price significantly: the local school district.

The United States home-buying population highly values quality education. According to a Realtor.com® survey of approximately 1,000 potential home buyers, 91 percent said school boundaries were important factors in their housing search.

The Price of Higher-Ranked Education

In 2013, Redfin, an online real estate brokerage, conducted a study of over 10,000 elementary schools and 400,000 home sales across 57 metro areas to analyze the relationship between school performance and home prices.

The study concluded that, on average, buyers pay $50 more per square foot for homes in high-rated school districts than homes in average-rated school districts. The study found that homes served by different school districts with similar square footage, the same number of bedrooms and baths and location near each other can range in price from tens of thousands to hundreds of thousands.

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Why Now is the Time to Buy

Posted by Laine Smith on 1/24/14 3:50 PM

Interpretation of 2012 and 2013 United States home sales data signal the housing market is strengthening and recovering exponentially and creating a beneficial period for potential homebuyers to get off the fence.

Home prices in 20 major U.S. cities rose in December 2012 by the most since 2006. Sales of existing homes increased slightly in December 2013, helping to lift sales for the year to the highest amount in seven years, according to the National Association of Realtors©.

So why is now the time to buy? Chief Economist for the National Association of Realtors, Lawrence Yun, believes the market lost momentum towards the end of 2013 due to limited job growth and low inventory. Yun predicts sales growth in 2014 will slow from last year’s 8.8 percent rise and eventually return to normalcy.

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Tax Benefits of Homeownership

Posted by Laine Smith on 1/17/14 2:01 PM

There is no doubt homeownership boasts several advantages. Owning your own home allows you to create a stable living environment for your family, personalize your living space and build equity. With tax season around the corner, homeowners can argue that the tax benefits are one of the biggest perks of owning their own property.

Interest & Points

When looking at an amortization schedule of your mortgage, the majority of your first years’ payments are towards interest, not principal. The benefit is that you can deduct that interest the year that it is paid, within certain limits. Homeowners can deduct up to $1 million in interest payments for a first or second home.

According to Realtor.com®, Americans save around $100 million every year by deducting mortgage interest on their tax returns.

Homeowners who pay points, or origination fees, on their home purchase or refinance can also deduct those points on their tax returns. A one percent fee on a $100,000 loan equals one point, or $1,000. Taxpayers can deduct the entirety of points in the year they were paid on a purchase. For refinance loans, points must be deducted as an amortization over the period of the loan.

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The New Qualified Mortgage/Ability-to-Repay Rule

Posted by Laine Smith on 1/10/14 3:20 PM

When applying for a mortgage, determining how big of a monthly payment you can afford can sometimes be a complicated situation. In the past, this has led to the problems the big banks are now facing with faulty mortgages and pay backs. In order to rectify some of these problems, new laws are going into effect that will better protect the consumer, as well as the lenders, to make sure that the buyers receiving a mortgage are actually qualified for their loan.

Starting today, the Dodd-Frank Wall Street Reform and Consumer Protection Act requires lenders to take more consumer financial information into account when making mortgage loans. The Consumer Financial Protection Bureau’s Ability-to-Repay rule protects buyers by making sure they can afford to repay the loan.

Under the Ability-to-Repay rule, a lender must verify your ability to repay using proper documentation. The proof of the following types of information will be required from buyers for all loans:

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Winter Home Buying

Posted by Laine Smith on 1/3/14 9:32 AM

If you’re thinking of making a home purchase, you may believe that the best time to do so is in the spring and summer seasons. When the temperatures drop and you’re recovering from the bustle of the holiday season, the last thing on your mind may be house hunting. But braving the cold and making a winter purchase can have several advantages.

Fewer Buyers in the Market

Because moving in the summer is more desirable than the winter months and families with school-age children are on a September to June cycle, less buyers flood the winter market. Fewer buyers mean less competition and less likelihood of multiple offers on a seller’s plate.

Seasonal Perspective

Though home buying in the spring and summer months allows you to view a home at its peak curb appeal, winter buying may help you determine the functionality of the home during the colder months. Did you feel cold while viewing the home? Were there any areas that felt drafty? Is there a functioning fireplace that would offset heating costs?

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Freddie Mac Home Possible®

Posted by Laine Smith on 12/20/13 8:17 AM

Freddie Mac’s goal of making homeownership affordable to a wider range of borrowers is achieved through Freddie Mac Home Possible® Mortgages. Because Home Possible® offers flexibility and options, like low down payments, this loan is a good option for first-time buyers, low to moderate income families, move-up borrowers and retirees all alike.

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HomeStyle® Renovation Loan

Posted by Laine Smith on 12/13/13 9:34 AM

Purchasing or refinancing a home in need of repairs, maintenance and/or upgrades may seem daunting and costly. With a Fannie Mae HomeStyle® Renovation Loan, it is possible to purchase with a small down payment, follow guidelines of a conventional loan and gain more renovation flexibility than an FHA 203k Loan

The HomeStyle® Renovation Loan allows borrowers to combine a purchase or a rate/term refinance mortgage and financed funds for renovation into a single-close transaction. Funds can cover the cost of repairs, remodeling or renovations to the property.

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How to Avoid Holiday Home Hazards

Posted by Laine Smith on 11/22/13 9:38 AM

Preparing your home for the holidays often includes stringing lights, hanging greenery, lots of cooking and turning up your furnace. Though holiday décor and festivities bring joy to the holiday season, they also bring fire hazards and personal safety issues.

According to the U.S. Fire Administration, house fires are most prominent in the month of December. The occurrence of cooking fires triple on Thanksgiving Day and approximately 12,500 people end up in emergency rooms each year with decorating-related injuries, says the U.S. Consumer Product Safety Commission.

Here are some tips to keep your family and home from holiday fire and injury.

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What is a VA Loan?

Posted by Laine Smith on 11/15/13 10:57 AM

Veterans and military families make many sacrifices to keep our country safe. Veterans are still able to benefit from a loan program created almost 70 years ago to honor their service and help them achieve a large part of the American dream: homeownership.

The VA Loan was established in 1944 when the GI Bill was signed into law by Franklin D. Roosevelt. The program was built to help servicemen who had missed an opportunity to build credit and a financial reserve while away at war.

The VA’s mission to level the playing field in the housing market for veterans is still at the heart of the program today. According to the Department of Veterans Affairs, in the 2012 fiscal year, the VA backed approximately 540,000 loans, averaging $220,000 per transaction and amounting to more than $119 billion nationwide.

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How to Prepare Your Home for Winter

Posted by Laine Smith on 11/8/13 10:03 AM

Now that fall is officially in full swing, it’s time to prepare your home for the oncoming cold weather. Winterizing your home can help lower your utility bills, protect your investment and most importantly, keep you and your family warm throughout the freezing months.

Block Drafts

One of the best ways to winterize your home is to block areas where cold air seeps in. According to the U.S. Department of Energy, drafts can waste 5% to 30% of your energy costs. The average American home has leaks that amount to a nine-square-foot hole in the wall, according to EarthWorks Group.

Pay attention to places where two different building materials meet, such as corners, around chimneys and along the foundation. Buy door sweeps to close spaces under exterior doors. Caulk, or apply, weatherstripping to drafty spots around windows. For brick areas on the exterior of the home, use masonry sealer.

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What is an Appraisal?

Posted by Laine Smith on 11/4/13 12:04 PM

Overview

An appraisal is a professional opinion of a property's value by an independent, licensed appraiser. Whether you are buying a home, refinancing a mortgage, settling a legal issue, appealing property taxes or just need to know the current value of a property, the appraisal will provide a home's true property value. An appraisal will determine the market value of your home and give you a solid backing on which you can make the most of your real estate investment.

Online Estimate, CMA or Appraisal

Don't confuse an online estimate or comparative market analysis (CMA) with an appraisal. Online computer generated valuation providers offer an estimate of the value of a property. The accuracy is limited to the basic comparable data available that may be incomplete or incorrect; also, the program cannot physically inspect a property to verify the condition. Real estate agents use CMAs to help home sellers determine a realistic asking price. Experienced agents often come very close to an appraiser's opinion of value with a CMA, but an appraiser's report is much more detailed and is the only valuation report a bank or attorney will consider when securing a loan or settling an estate.

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How to Improve Your Home Value

Posted by Laine Smith on 10/25/13 9:58 AM

Getting top dollar for your home doesn’t always require expensive remodeling or landscaping. The goal in increasing your home’s value is to eliminate buyers’ biggest objections and boost your overall home appeal. The best way to position your home for a top-dollar offer is to present it in turn-key condition.

Curb Appeal

When it comes to real estate, a book is always judged by its cover. To entice more buyers to inquire about your home, spruce up what they see from the curb. If your lawn is looking bare or neglected, put your green thumb to use. At the very least, plant a few shrubs, pull weeds, trim overgrown trees and rake and dispose of leaves. You may also try a few of these budget-friendly landscape projects:

  • Line your walkway with solar-powered lights.
  • Keep the lawn mowed and edged. Reseed any bare spots.
  • Add color to your flower beds.
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Which Mortgage Is Right For Me?

Posted by Laine Smith on 10/18/13 10:37 AM

As with any home-buying decision, determining what your current situation is and what you hope your future plans will bring are essential to making the correct choice regarding your mortgage program. Initially you should ask yourself these questions:

  • Where do I see myself in five years? Ten years?
  • How long do I plan to live in this house?
  • Do I have to or want to make home improvements? Do I have the reserves to do so?
  • Can I take financial risks?
  • How soon do I want to be debt-free?

Your financial situation, the state of the economy and your disposition to financial risk influence the correct choice for you.

There are two main options when it comes to your mortgage type – fixed and adjustable. Fixed-rate means that your interest rate will remain the same through the term of your loan, whereas the interest of an adjustable-rate mortgage (ARM) fluctuates periodically to reflect market conditions. A fixed-rate mortgage may be right for you if:

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How Much of My Income Should I Spend on My Mortgage?

Posted by Laine Smith on 10/11/13 10:06 AM

If you’re like most people, a house is the biggest purchase you will make in your lifetime. Spending too much on a home could interfere with other financial goals, such as retirement and college savings. It is best to determine what you want and can pay on a mortgage before you start looking.

To qualify for a home loan, lenders will look at your front-end ratio and back-end ratio. Your front-end ratio determines how much you will be spending on principal, interest, taxes and insurance in comparison to your gross monthly income. Generally, a lender will want your front-end ratio to be below 28 percent of your gross monthly income.

Back-end ratio not only considers your principal, interest, taxes and insurance but the debt you owe, such as student loans, credit card debt and automobile loans. Ideally, this ratio should not surpass 36 percent of your monthly gross income.

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Can I Apply for Credit When Getting a Mortgage?

Posted by Laine Smith on 10/3/13 11:52 AM

You’ve made the decision to purchase a home, completed the loan commitment process with your lender and are preparing for closing day. While waiting to take ownership of your new home, perhaps you figure it’s time to purchase a new family vehicle, buy all new furniture or open up a line of credit at a home improvement store for all the upcoming items you’ll be needing as a new homeowner. But is it a good idea to apply for financing when getting a mortgage?

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Pre-Approval vs. Loan Commitment

Posted by Laine Smith on 9/27/13 10:33 AM

At some point in your home shopping process you will be asked if you have been “pre-approved”, a commonly misunderstood home financing term. Knowing the difference between a pre-approval and loan commitment will help you avoid surprises when you are in the process of applying for a mortgage loan.

In order to be approved for a loan, a lender must verify various aspects of your finances and of the home you are purchasing. Typically lenders begin this process with a pre-approval.

To get a pre-approval the lender will run your credit score and compile a loan application with the information you provide regarding income, employment history, assets, etc. The lender will analyze this information and issue a decision on whether or not you are eligible for a loan. If you are qualified for a loan, the lender will issue you a pre-approval that states your qualification subject to verification of certain items, such as income and assets.

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Should I Buy or Rent?

Posted by Laine Smith on 9/20/13 9:56 AM

Ultimately the answer to this question depends on multiple factors: your financial situation, your plans for the future and your desired lifestyle. Homeownership and renting both have their share of benefits, but it is necessary to consider both before making your decision.

First, let’s weigh the benefits of buying. Homeownership has long been a part of the American dream. Your purchase becomes your place to call “home”, your respite, pride and a place to personalize to your heart’s desire. Homeowners also gain:

  • Tax benefits. Being able to deduct the interest on your mortgage and property taxes offsets a portion of the cost of owning your home.
  • Stability. If you signed on for a fixed-rate mortgage, your monthly payment will stay the same for the life of the loan, whereas rental rates rise over time.
  • Equity. Provided you plan to stay in your home for at least four years and home prices remain stable, homeownership allows you to create equity and stability for your family.
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Is Your MLS Source Reputable?

Posted by Laine Smith on 9/13/13 8:58 AM

If you’re like the 90 percent of home-shopping consumers, you are using the Internet as your primary source for housing searches. Technology has changed how consumers shop for real estate, but is your source accurate when it comes to listing data?

First it is important to know the difference in searching tools. A multiple listing service (MLS) site is an enterprise of all real estate agents which shares complete listing data with consumers through brokerage websites. A brokerage employs local real estate agents and belongs to the MLS. A national portal operates exclusively online but only has partial access to listing data.

Compass Mortgage encourages you to check out the difference between the Home Scouting Report®, a brokerage site provided by Home Buyers Marketing II, Inc. and the other national portal sites.

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How to Choose the Right Real Estate Agent

Posted by Laine Smith on 9/6/13 12:20 PM

Choosing to buy or sell a home is one of the most important financial decisions you will make in your lifetime. Finding the correct real estate agent can save you time, effort and frustration whether you are looking to find your dream home at the right price or sell you current home quickly and for top-dollar.

When you decide that you are ready to buy or sell, choosing an agent to represent you can be overwhelming. A little legwork and questioning go a long way in finding one that is right for you.

Referrals

Ask someone you trust, and who has bought or sold recently, for a recommendation. Your friend or family member’s experience is a good indicator of how satisfied you will be with a certain agent. Referrals are also extremely influential in the success of a real estate agent. If an agent knows you have been referred by a past client, it is likely he or she will strive to give you the same quality experience.

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What to Expect When You Close Your Loan

Posted by Laine Smith on 8/30/13 2:05 PM

You’ve signed the purchase agreement and been approved for the loan, but you still have no rights to the property until the day you get to legally transfer ownership: closing day.

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What Credit Score is Needed for a Mortgage?

Posted by Laine Smith on 8/23/13 9:28 AM

When it comes to pre-approval, your credit score is one of the most influential factors determining your eligibility for a loan and what rate you will qualify for. Lenders use your credit score as a risk assessment for approval.

Your score is calculated by a combination of scores from the three national credit bureaus: TransUnion, Experian and Equifax. Lenders use your median score of the three, known as a FICO score. FICO scores can range from 300 to 850.

Scores above 740 are considered “top tier” credit and will get you the lowest interest rates. Because your score reflects your lending risk, the lower your score the higher your risk is. Therefore, if your score is low, it is likely you will pay a higher interest rate.

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What Goes Into a Mortgage Payment?

Posted by Laine Smith on 8/16/13 9:41 AM

Understanding what goes into a mortgage payment is very simple. A monthly mortgage payment includes at least two parts: principal and interest. Principal is the amount of money you have borrowed and interest is the cost of borrowing that money.

For most homeowners, there is also a third part that is paid into an escrow account. Escrow is a financial instrument created in order to store money collected by a lender. The escrow account allows you to pay for things like homeowners insurance, property taxes, condominium and association feeds and mortgage insurance, if applicable. When your taxes and insurance are due, the lender pays them for you from the escrow account. This amount of your mortgage can increase or decrease, even with a fixed-rate mortgage. Therefore, your mortgage will include principal, interest, taxes and insurance, also known as the acronym PITI.

For example, you find a home that costs $170,000. You are able to make a down payment of 5 percent, or $8,500. The annual property taxes are $1,200 and the annual homeowners insurance is $720. Because your down payment is less than 20 percent, you will pay private mortgage insurance (PMI), as well.

With a 30-year fixed mortgage and an interest rate of 4.5 percent, your PITI with PMI is as follows:

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How Location Affects Property Value

Posted by Laine Smith on 8/9/13 11:24 AM

When it comes to determining property value, what are the three most important factors? Location, location, location.

A “good” location can be determined by dynamics as broad as the economic stability of the community or as specific as to where the home is situated within a certain neighborhood.

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What is an Escrow Account?

Posted by Laine Smith on 8/2/13 12:39 PM

An escrow account is a financial instrument created in order to store money collected by a lender to pay for property taxes and hazard insurance when they become due by a third party. A lender will usually require monthly escrow payments to ensure that they have enough funds to pay for taxes and insurance. Since an escrow account is often used in the sale of a home, lenders will require these payments to guarantee that their collateral is secure.

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How to Calculate Property Taxes

Posted by Laine Smith on 7/26/13 3:01 PM

Property taxes can drastically change your monthly mortgage payment depending on where you decide to buy your home. They also can be very confusing for a lot of homeowners. To understand how much property tax you should be paying you need to understand how your property is valued and how the taxes are actually calculated.

The government collects real estate taxes, also known as property taxes, to fund multiple municipal operations, schools, public services and roads. The way that property taxes are calculated would be through the use of the mill levy and the assessed property value.

The first thing you will want to do is get your home's assessed value. You can either call or visit you county tax assessor's office or get the information from their website. Next you will need the taxable percentage of assessed value. As an example, let's say your assessed value is $200,000 and that 30 percent of assessed value is taxable. Multiply the taxable percentage by

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Today's First Time Homebuyers

Posted by Laine Smith on 10/13/11 2:53 PM

Meet the new first-time buyer. They’re younger, more likely to be single, signing for smaller loans than their predecessors, putting more money down, getting fixed-rate mortgages, and planning to stay in their houses longer. What they saw during the housing collapse has turned them into a cohort of financially conservative buyers who could help prevent another cycle of bubble and burst.

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Energy Effecient Mortgage Programs

Posted by Laine Smith on 8/22/11 11:36 AM

These days, people are doing everything they can to keep our world beautiful. Conserving energy and water are great ways to preserve the Earth and save you money on your monthly bills. You could begin this process today with your home. The FHA's Energy Efficient Mortgage program (EEM) helps homebuyers or homeowners save money on utility bills by enabling them to finance the cost of adding energy efficiency features to new or existing housing as part of their FHA insured home purchase or refinancing mortgage.

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The Debt Downgrade and Your Mortgage

Posted by Laine Smith on 8/9/11 8:36 AM


Mortgage rates are set off of the interest rates on U.S. Treasury notes and bonds. Even though Standard & Poor's pulled its AAA rating of the United States Friday night, investors still rushed into U.S. Treasury securities Monday as a safe haven, believing more in the "full faith and credit of the United States" than in the opinion of Standard & Poor's credit analysts. As investors snapped up Treasury notes and bonds they pushed down interest rates on those securities, which move inversely to prices. "The flight to quality effect is dominating," said Walt Schmidt, senior vice president of FTN Financial Capital Markets. "The net effect is lower mortgage rates."

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Mortgage Applications Rise Week of 8/1/11

Posted by Laine Smith on 8/5/11 11:28 AM

The number of mortgage applications filed in the United States increased more than 7% last week as mortgage rates fell across the board to almost their yearly lows, according to the Mortgage Bankers Association's market composite index. This measures our country's mortgage loan application volume every week.

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Home Ownership: The American Dream

Posted by admin on 7/11/11 3:41 PM

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