What To Consider Before Refinancing Your Home Mortgage

September 19, 2009

Should You Refinance Your Home Mortgage?

Refinancing a home mortgage is only worth the effort if the resulting refinanced loan helps you avoid foreclosure, if it is sustainable AND if it reduces you total home loan costs.

During the market boom, the main reason people sought to refinance their loan was to take advantage of any home equity. Homeowners refinanced loans to get a higher principal and use the extra money for things like debt consolidation, buying a new car, paying their child’s tuition, or preparing for retirement.

Today, however, with the downturn of the economy and the bust of of the housing bubble, refinancing has now become a means to avoid foreclosure - ever since the Obama administration’s Making Home Affordable program for those whose mortgages are currently owned by Freddie Mac or Fannie Mae.

Under this program, your mortgage lender gives you a loan refinancing estimate. This shows your new monthly payment, new mortgage rate and the total amount you’re going to pay over the number of years specified in your contract.

Keep in mind that many people, after reviewing the payment and terms of the refinanced loan, find that it is NOT an improvement over the original. This is because you can’t simply compare monthly payments to monthly payments, especially if your original loan is an adjustable rate mortgage or ARM. In ARM refinancing, your monthly loan payment will always increase if you convert to a fixed higher rate. It may seem that the new rate is higher because you were given the option to only pay the interest of the loan, but ultimately the fixed higher rate would enable you to sustain the loan.

Therefore, refinancing for an ARM can be good if it’s expected to reset to a much higher rate in the next few years. It will help you sustain payments in the long run and will also help cut interests costs because of the record drop in rates right now.

So, if you’re currently at a fixed rate and you’ve been making payments for several years, look carefully at the full terms and conditions of any new loan. You just might be increasing your total loan cost, rather than lowering it.

A New Look for New Home Buyers

September 16, 2009

Ushering In A New Generation of Home Buyers

I was recently browsing the Internet and searching for various topics when I came across an image of an article – so I started scan it up and down and low and behold – it was about the new changes in the housing market! Thus my interest was intriuged and I began to read on. What I liked about this article was that it has a different take on some of the changes that will or have taken place. It wasn’t about the financial mess that we’re in and I thought it provided an interesting view point on the new face of real estate.

“Housing the NeXt Generation”

No author’s name was given, but the article featured Generation X or the “lost generation” and the affect they’re going to have as the now mid-20 to early-30s group starts the housing hunt! It compares this generation to that of the baby boomers (essentially, their parents) who once wanted large suburban homes, to Generation X’s more contemporary and urban lifestyle.

The unnamed author believes that the “Xers” will, over time, dramatically change the housing culture by requesting differing styles from builders than that of their parents. According to this post, it will be things like ‘Homes with cozy and intimate rooms’ siting that Xers generally want smaller families than that of baby boomers and will require less spacious and more practical rooms.

They will also request homes that are ‘pre-wired for computer and video transmissions.’ As the new tech-savvy generation grows up along side laptops, faxes and Internet, having appropriate access ports in each room will be very important. They also list features such as low-maintenance, high quality, and have a greater taste for fine details and classical architecture in addition to green designs.

In short, we will eventually see less new homes in the suburbs, of which the supply is plentiful, and more new high rise condos and renovated warehouses popping up in the metropolitan!

You can read the full article at Medina Count Home Builder’s Association.

What To Do If Your Home Won’t Sell?

September 8, 2009

Make Sure Your Home Reflects the Current Market Value

This just in: It takes longer to sell your home now than it did two years ago! Just kidding! If that’s news to anyone, you better go back a few blog posts and start reading!  The truth is we know the minute we even start to THINK about selling our home that it’s most likely going to be a long process. The reason for this is simply supply and demand. With the credit crunch and housing hold - some people are waiting several months before they even get a nibble! Then there are others who can put it on the market and have it sold within a month! So what’s the difference? Surely if you’re selling your home in today’s market, it is most likely out of necessity, such as to avoid foreclosure, job relocation, or you really need to upgrade or downgrade. Whatever it is, if you’re home has been on the market longer than you thought it would, consider trying something new!

Reduce, Remodel, or Rent?

One of the biggest reasons homes today don’t sell is because the seller is under the illusion that they’re house is worth more than what the market says it should be. In other words, ignoring their home’s market value. You may have a beautiful cap code home in a pristine neighborhood, with great schools and you’ve heard (at some point) that a home like yours could sell for half a million dollars. Well, that was probably two to three years ago. Today however, the average market value of a home has seen a 17% decrease since those days. Because there are so many other houses on the market, your home, in order to sell quickly, needs to reflect the market changes and even be more competitive!

• SELLING TIP: Sellers whose homes aren’t selling should analyze their asking price and compare it to the market value. Ask your real estate agent for help. You can also look at similar homes to see what they were asking compared to how quickly they sold.

If that doesn’t work, try remodeling. Whatever you can afford. One coat of fresh paint can go along way in increasing your home’s appeal both inside and out. (By the way, for great repainting tips, we highly recommend getting an online paint color consultation from PaintYourSpace.com). From changing fixtures to full room remodels. If you’re home isn’t selling, take it off the market temporarily and do some work to it. Then when you’re ready to start again, give the listing a whole new look! This keeps it fresh in the eye of potential buyers!

• SELLING TIP: Keep in mind that you don’t have to do a huge remodel to get the most value out of your home. Look online for simple projects and crafts and staging ideas that are sure to add appeal and even value ($$$) to your home.

Finally, have you considered searching for a tenant rather than a buyer? It might be a good option for some of you - especially if you’re less flexible with adjusting the selling price. By renting your home, you can have help making the mortgage payments, and can hold off actually selling until the market improves. However, this can also be a risky move. Before going down this winding road… talk to a tax adviser. The tax laws affecting single-family residences differ from those of income-producing properties. In addition to the tax laws, you’ll also want to become well-versed on landlord vs. tenant laws and regulations. Do your research and know what you’re getting into before asking someone to live in a home you plan to sell in the near future.

• SELLING TIP: One tax benefit of owning your home is that you’re entitled to $250,000+ tax-free gain when you sell, but restrictions apply. In most cases, you’ll need to have owned AND occupied your home for two out of the last five years. If you’re looking to move out of the area while renting your property, this could pose a problem when you do decide to sell.

Whatever the reasons you have for selling today, be sure that you’re well informed of your choices you have. If you were to ask a financial adviser for your best options, they might tell you now is not the time to sell, but it is certainly better than it was six months ago. My point is there are ups and downs to every road and the best thing you can do is to know what the right choice is for you.

Will A Home Security System Increase My Home Value?

September 1, 2009

Yes! Home Security Increases Home Value

It’s been quite an interesting week for your friendly, neighborhood blogger. This weekend, I came home to find that someone had picked the lock on my back door and let themselves in. Luckily, we were not home at the time, and nothing was taken. We locked up and made the house secure once again, only to find the same exact thing the very next morning - door was open, but nothing had been touched! So what does this have to do with your home value? Good question. You see we’ve concluded that we either pranking poltergeist or an indecisiveve intruder! I’m leaning towards the latter. The fact that nothing was taken, leads me to believe that they’ll be back and this time with a plan to probably take a lot of our valuables! Well, we weren’t too happy about the idea so we’ve decided to purchase a simple home security system. It will monitor our home around the clock and immediately sound the alarm when something’s not right.

We have multiple reasons to be happy with our decision and I thought that’s what I’d share with you today! In addition to the peace of mind and responsible citizen aspect of home security, there are actually a lot of financial benefits as well!

Save On Homeowners Insurance

The first is that you’d be amazed at what you save in your home owner’s insurance. Items like dead bolts and alarm systems are fairly inexpensive and easy to install. Some companies will offer you 15-30% savings if you have the appropriate security coverage for your home.

Increase Your Resale Value

You can also add value to your home when you’re ready to sell, but the amounts will vary based on the size and scope of the individual features you have. For example if you put a $20,000 security monitoring system in a 1500sq ft bungalow, you’re not going to recoup the cost of the system, and would more than likely detract from the home itself, therefore loosing it’s appeal to the majority of potential buyers. In other words you’d actually loose value. However, if you have an appropriate amount of security, something that doesn’t scare buyers away, you could see an increase of thousands of dollars at selling time!

So to sum up, please excuse the self-narrative nature of this particular blog post, but I thought it would be especially important to mention in light of the number of burglaries going on right now. Many people are finding themselves in tough times due to the economy and resorting to desperate measures. This compromises the safety of your home and your family. Therefore, anything you can do to protect them, and your home with the added bonus of earning a little bit of money on the side will prove to be extremely beneficial in years to come.