Advantages of Getting a Mortgage Refinance

When homeowners decide to refinance their mortgage, their chief concern is to get lower interest rates. It is true that refinancing is a great way to get lower rates, but there are several other benefits as well.

If the interest rate on your existing mortgage is 6 percent and you can reduce it to 5 percent by refinancing, you should definitely go for it. Besides reducing your monthly mortgage payments, mortgage refinancing is ideal for long term cost savings. Here are some of the benefits of getting a refinance.

You can reduce the term of the loan

When you refinance, you get to reduce the term of your home loan. You can, for example, go from a 30-year term to a 15-year term. And when you reduce the term, you get lower interest rates. This will also reduce your interest costs. Your monthly payments will go up, but you will be able to pay off the loan faster. As a result, you can build up equity faster.

You get to switch from an adjustable mortgage to a fixed interest rate mortgage

It is true that ARMs have low interest rates during the initial period. But the rates can go up significantly when the loan resets. Worse still, there is no way you can predict what the rates will be five or ten years from now.

If you have an adjustable mortgage, you will be able to switch to a fixed interest rate mortgage when you get a refinance. This will also ensure your piece of mind.

Cash-out refinancing

If you get a cash-out home loan refinance, you will be able to turn your home's equity into cash. The value of your home may have appreciated over the years. If you feel that you have accumulated considerable equity, you can refinance the home at its current value and pocket the difference. You will be able to use that money for a home remodeling project or something similar. Make sure that you do not use this amount to splurge on unnecessary items. If you are not a disciplined borrower, a cash-out refinance will land you in even deeper debts.

Consolidate two loans

When you get refinance, you can consolidate your main home loan and a home equity loan. This will allow you to get an even lower monthly payment. In addition, you will need to make only one payment per month.

Recover from divorce

You and your spouse may be co-owners of the property. While there is nothing wrong with that arrangement, problems can arise if you decide to divorce. If, after divorce your ex-spouse doesn't contribute his/her share of the monthly payment, you will be in trouble. In this case, if you get refinance, you will have sole ownership over the property if you decide to keep the home.

If at least one of the above reasons appeals to you, you should consider the possibility of getting a refinance. Call your current lender and ask if they are willing to offer you lower rates. If they aren't, you should consider other lenders. You can search for lenders online. You should also consider contacting community banks. Whether you stick with your current lender or not, you can save a lot of money by getting a refinance provided that you have got the right reasons.

How to Determine Whether Your Visitor is a Serious Buyer

You have listed your home for sale, and now you are getting a lot of visitors. But don't expect each one of them to make an irresistible offer. Many people who visit a property are not serious buyers. They simply want to take a look at the house and leave.

This can frustrate the seller, but remember that showings are a normal part of the home selling process. If you really want to sell your property, you should be ready to show it to a number of potential buyers. You must be wondering if there is a way to determine whether a buyer is serious or not. Yes, you can decide whether a buyer is serious by simply asking them a few questions before they turn up to see the house. If the answers aren't satisfactory, you can refuse the visit.

Here are the questions you need to ask:

Do you think that my home will meet your needs?

Ask the prospective buyer if they have reviewed your listing thoroughly. And if so, do they think that your home will meet their needs? If they want three bedrooms and you have only two bedrooms, chances are things won't work out.

When do you intend to move in?

You should know when the buyer intends to move in. If the buyer wants to move in quickly and you are not ready to vacate the home in six months, then it isn't a good match.

Are you looking for 'extras'?

Some buyers expect 'extras'. For example, they might assume that you will sell your home appliances with the property. If that is not the case, you should let them know. Clearly state what items are included and what items are not included in the sale.

Do you have the financial means to buy a home?

Ask the buyer if they have got a mortgage pre-approved for the price of your home. If so, it is a clear indication that the buyer is serious. Serious buyers will explore the possibilities of getting finance even before they start looking for properties. However, just because a visitor doesn't have a pre-approved mortgage, you cannot assume that they are not serious. It is possible to get a mortgage approved after making an offer.

Hold an open house

If you feel that buyer visits are consuming too much time, you can consider holding your house open once a week. Ask everybody who has expressed an interest in your property to come and see it during this occasion. An open house will attract many visitors and at least one of them will hopefully come up with a great offer.

Selling a property can be a time consuming process. Don't expect to find a buyer overnight. There are, however, a few things you can do to sell your house quickly and profitably.

First of all, make sure that your asking price is right. If you quote an astronomical sum, finding a buyer will be very difficult. You also need to ensure that your home is in good condition. Even minor issues like leaking faucets and dysfunctional light bulbs need to be fixed before listing the property for sale.

Minor Oversights That Can Land You In an Undesirable Mortgage

If you are not an all cash buyer, you will definitely need to get a home loan. The home loan application process can be both stressful and time consuming. A minor oversight can lead to big headaches in the future. So take your own sweet time to review your loan documents.

Do your research

Do your research to keep yourself informed about the process. You should be crystal clear about the terms and conditions before signing the loan document. If you come across terms that you do not understand, ask about them. Don't assume that things will work out fine. They probably won't. This doesn't mean that your lender is trying to cheat you. They aren't, but you might assume that your mortgage will work in a certain way. And when you later discover that your assumptions were wrong, you will be in for an unpleasant surprise.

An inability to understand the terms specified in the loan document will land you in trouble. Some mortgages, for example, come with prepayment penalties. These penalties limit the repayment options you have. If the mortgage comes with a prepayment penalty, you will have to pay additional fees if you pay off the loan in 1- 3 years. Now that interest rates are pretty low, you will definitely not want to choose a mortgage with a prepayment penalty.

Here is a glossary of terms you might come across in your document.

Amortization

The word amortization is used to refer to the process of reducing an amount of money owed by making regular payments. During the initial years of your mortgage, the major chunk of your monthly payments goes towards the interest. Towards the end of the term, you pay more principal and less interest.

Comparables

The term comparables refers to comparable properties in your area. While appraising your home, an appraiser will consider the price at which similar homes in the locality were sold.

Escrow

Every month, a certain percentage of your mortgage payments goes to your Escrow account. Escrow will hold this amount to pay your yearly bills such as mortgage insurance, property tax, and homeowner's insurance.

Federal Housing Administration (FHA)

FHA is a US government agency. It sets the mortgage underwriting standards and insures home loans made by banks and private lenders. FHA loans make homes more affordable because they allow people to borrow with less equity or lower down payment.

Lien

The word lien means that somebody has a legal right to somebody else's property. The mortgage is a kind of lien. It gives the lender the right to seize the borrower's property if terms specified in the mortgage are not met.

These are some of the terms you will come across during your home loan application process. There are several others, too. Here is a quick overview of some missteps you must not make.

Your credit score determines your chances of getting a loan, so review it frequently. Avoid opening any new line of credit as it may affect your score. Do not change jobs in the months before applying for a home loan. If you must change jobs, wait until you get the sanction letter.

The Best Time of Year to Buy a Home

Ah spring time! When flowers are young, the air is fresh, and people are in a home buying frenzy. This frenzy is not limited to age, gender, or marital status - it grips all classes of people.  When tender tulips start showing up through melting snow in cold climates and the rain stops falling in the rainy areas, prospective buyers start hitting the streets looking for homes.

Typically during the spring, the real estate market booms throughout the country.

Reasons Home Buyers Choose Springtime

Barring some exceptions, most home buyers select spring to begin house hunting. Here are some probable reasons why:

• Winter is over and spirits are high.
• Families get together more often with long awaited holidays in March-April.
• The school year is closing soon. Buyers plan to begin moving soon after the school ends.
• There are more inventories available in the market since many sellers decide to go for spring listings.
• This is a part of pre-vacation planning. Buyers prefer to move during vacation time.

Which Day of the Year is the Worst to Buy a Home?

You can say it's the very last Friday in the month of May. Many people might think that Christmas is possibly the worst day, but that’s not true. There are very few interested buyers at that time and competition is low. People are in good spirits and feel more generous, and home sellers might extend this generosity when they accept your offer.

The time when home buyers start scouting for a home is not an issue. The time they eventually finalize the home they’re going to buy might create a problem. This often happens in April. After that, very often a closing date of the last Friday of May is decided during the signing of the purchase offer. All at once, there are a huge number of closings scheduled for that very day of May.

Why You Should Avoid the Worst Day

The reasons are plentiful, beginning with competition offered by other buyers and concluding with the actual moving in.

• From the available inventory, the best new listings are lapped up first at higher prices. Neighborhoods play an important role. Homes in good condition with appealing prices and desirable neighborhoods get many offers. Because of the competition, buyers often end up with a higher price than planned.
• There’s often a peak of pending sales in April which results in a large quantum of May closings. Regular workloads of real estate workers sometimes triple during this period and there are backlogs which might delay your closing.
• Otherwise exemplary services can be weakened by the Memorial Day holiday. Due to long weekends, workers take off for holidays and cannot process your transaction. High volumes also delay processing of loan documents.
• Higher interest rates might result from delayed closing if the locking period of your loan ends. There is a good probability of this if there is a rising demand of properties in your area and you might be stuck with higher mortgage payments.
• Since many people shift residences at May end, movers hike their rates. So your moving costs escalate. You might find it difficult to even find a mover in peak seasons. Many movers get booked well in advance for all weekends right through July.

Make sure you don’t sign the deal during the worst time to buy a home! It’s best to start your home hunting process early.

How to Prepare Your Home for Showings

Your home should look as attractive as possible when potential buyers come to see it. If you can leave a positive impression on the buyer, you will get a better price for your property.

Here are a few tips to prepare your home for showings:

First impression counts

The first impression that your home leaves on the buyer is very important. If you can leave a positive impression, the visitor may as well turn into a buyer. The first thing you need to do is to keep the front part of your home attractive. If it looks great, buyers may actually want to see the inner parts as well. If the front portion doesn't look good, very few people will bother to venture inside.

If no one visits your home even after you have erected that 'For Sale' sign in the yard, there may be something wrong with the front part.

Clean the drive way. Mow the grass and water your plants. Add some potted flowers and plants to your garden. These small details will instantly make the home more inviting.

Make it look like they can move in immediately

Buyers should be able to move in immediately. At least that is the impression you should leave on them.

Take a second look at your walls

Overly bright colors might appeal to your taste, but they can put off many a potential buyer. Use neutral colors for your walls. If you have dark paints on the walls, the rooms may feel like a cave. By contrast, light shades make your rooms more spacious and lively. Also raise those blinds to let some sunlight in.

Get rid of those foul smells

Your home should look and smell clean. Smells are as important as looks. Foul smells will drive your visitors away. So, do whatever you can to get rid of bad odor. This is particularly important if you have pets. Stale air doesn’t smell good so keep the windows open whenever possible. Let fresh air enter the rooms.

Remove clutter

Clutter makes the space look cramped, so remove all unnecessary objects. If you have too much furniture, you should remove at least a few items. Also keep your closets and cupboards clean and orderly. Visitors might look in them. Remove collectibles and personal items like photos, trophies etc.

Invest in new furnishings

If your curtains and carpets are old, you should consider renting new pieces while you are showing the house. If the furnishings are new, the home may also look new. Also consider applying a fresh coat of paint. This is imperative if there are stains on the walls.

Artwork

Hang some paintings on the walls. If you do not have any artwork, you should consider buying or renting a few pieces.  Nice paintings add a touch of sophistication to the space. They also reveal that the owner has fine tastes.

Replace faulty fixtures

If you have lights that don't work, replace them. Buyers wouldn't want to replace the fixtures, so make sure that they are in working condition.

Hire home stagers

If your budget permits it, you should consider hiring home stagers. They know how to present your home before potential buyers. They will charge a fee, but in the end you will get a bigger price for your home. Besides increasing the selling price, home staging reduces the time it takes to sell the home.