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Real Estate - Mortgage

The Worst Home Buying And Selling Advice Realtors And Mortgage Brokers Have Heard

If you’re about to buy or sell a house, you’re about to get a lot of advice. What’s so tricky about bad advice in buying or selling a home is that often it sounds like good advice. But some real estate agents say not upgrading your home is terrible advice. And today’s buyers have a very difficult time doing this if the home needs updating.” “If it ain’t broke, don’t fix it.” This is similar to the advice about not making upgrades, yet different. “Some homeowners think that they can ignore small problems, like a water spot on the ceiling, or some peeling paint, but in reality, the cost of deferred maintenance can really hit a homeowner hard the longer they let a problem go,” said Leslie Turner, a broker in charge at Hudson Phillips Properties in Charleston, South Carolina. … If the property looks well maintained and buyers perceive that it has been well maintained, perhaps with records to back that up, then the property will usually sell for a higher price than a similar property with obvious deferred maintenance.” “Don’t spend more than you can afford.” That sounds like fantastic advice. “Always price at market value the first time. “It’s a new home. Tucker said she knows of a homeowner who bought a brand-new home from a national builder and decided to forego the home inspection. “With all of the buyers I represent, I strongly push for a home inspection to be performed by a third-party inspector that they hire ― someone who works for the buyer and not the builder.” Alamy “You’re putting up your home for sale, so you’d better do it fast.” If you need to get your home sold quickly, that’s one thing.

Americans want to buy but need to be savvier mortgage shoppers

For many Americans the desire to own a home is not being dampened by rising prices. Rather, 37% of adults - rising to 52% among Millennials – say they plan to buy within the next two years, including 48% of those who do not currently own a home. The PenFed Credit Union National Mortgage Survey released Tuesday, also shows that renovation intention remains strong with 54% of homeowners wanting to renovate, even though most (95%) say they like their current home. "Americans are undeterred when it comes to owning their dream home and we are finding that for many that means renovating their current homes," said Craig Chapman, vice president of mortgage sales and business development, PenFed. "At PenFed our second trust loans are up and we expect to end the year with a 20% increase over last year. If they were to pick a dream location, on the beach would be the top choice for 30% with other popular choices including a ranch/farm (22%), in their favorite city (22%), and in the mountains (18%). Most buyers didn’t shop around for a mortgage The survey also shows that many homebuyers are not getting the best mortgage deal, often due to some misconceptions. Almost two-thirds of buyers (65%) didn’t shop around for a mortgage when buying their home and 44% believe that the lowest rate is always the best deal. There is also some confusion around the terms ‘pre-approved’ and ‘pre-qualified’ with 30% believing they are the same and another 22% not sure. More market update:

Mortgage fraud by wannabe home buyers is on the rise. And you can blame...

According to mortgage-fraud researchers, income misrepresentations on home-loan applications were up 22.1 percent in the second quarter of this year compared with the same period in 2017. Ominously, most of it is not traceable to criminals trying to bilk lenders out of tens or hundreds of thousands of dollars through traditional loan swindles. Rather, it’s increasingly what researchers call “bona fide” borrowers who don’t have the income to qualify but are determined to get a home mortgage, even if they have to mislead the lender. How’s this happening? Researchers say many applicants can go online and find sites that will help them create customized pay and employment records, sometimes even confirmable by a phone call by the loan officer to an “employer” that doesn’t exist. Or they borrow thousands of dollars for their down payment but swear to the lender that it’s an interest-free present from a cousin or a brother, documented with a genuine-looking gift letter using a form obtainable online. It’s all part of one of the least-reported issues in the real estate market of 2018: Home-purchase mortgage frauds are on the rise and are posing cat-and-mouse challenges to major players, including banks and big investors such as Fannie Mae. ● Fannie Mae recently warned lenders via several alerts about a loan-fraud technique in which applicants claim to work for specific companies and provide income and employment information that appears to be bulletproof but turns out to be totally bogus. “Some fake employer setups are well-organized and provide pay stubs, phone verifications” and even fake diplomas. “Some of these services are openly advertised on the internet” and feature multiple levels of services and fees.

Reasons to refinance: I want to pay off a mortgage faster

You can refinance to a shorter term, which usually also offers a lower interest rate You can refinance to a lower rate but keep making the higher payments, reducing your principal balance faster You can take a cash-out refinance to clear all your higher-interest debt, then use that monthly saving to accelerate the repayment of the mortgage Usually, you have to make a higher payment to pay off a mortgage faster. But sometimes you can reduce your rate, continue to make the higher payment, and knock years off your mortgage term. Some mortgage agreements impose prepayment penalties if you pay off your home loan early. If you’re banking on high returns on your investments, those won’t be certain You’re definitely going to receive (as savings) the money you don’t have to pay out by having fewer mortgage payments You can easily work out the total costs of borrowing for your two models: leaving things as they are now and paying down your mortgage quicker. Refinance to a shorter term The most obvious way to pay off a mortgage faster is to refinance to a loan with a shorter term. However, these loans come with higher monthly payments. Just pay more Many lenders will allow you to increase the size of your regular mortgage payment or simply make extra payments when you can. If you carry on paying monthly, you’ll make only 12. You can then use all that extra money to pay down your mortgage faster. But you’ll also have a higher mortgage balance and probably a longer loan.

This is the No. 1 source of financial stress in Florida—and it’s not debt...

In Florida, the median price for a home is nearly $300,000, according to real-estate website Zillow, and the median rent is $1,800. And in the expensive ZIP code of Boca Grande, housing prices go dramatically higher: It can cost more than $1.6 million to buy the typical home. It's the cost of living overall. Floridians chose everyday costs. Almost a third of residents "are stressed about paying for everyday living costs," says GOBankingRates. 1 cause of financial stress in the country overall is also everyday living costs, according to the survey. About 32 percent of all respondents chose everyday costs as their top financial stressor, including those in notoriously pricey states like New York and California. Here are some tips to help you get started. Like this story? Subscribe to CNBC Make It on YouTube!

3 questions to ask when you’re considering an adjustable-rate mortgage (ARM)

In this article: An adjustable-rate mortgage, or ARM, is a mortgage which offers introductory mortgage rates — known as “teaser rates” — for up to the first 10 years of a loan. First-time home buyers who plan to keep the home only a few years might use an ARM for huge savings Is your mortgage a jumbo loan? If you want to borrow more than your area’s loan limit, you’ll need a “jumbo loan.” Jumbo loan fixed rates tend to be much higher than their adjustable counterparts Is an adjustable-rate mortgage right for you? An ARM is a mortgage which offers introductory mortgage rates — known as “teaser rates” — for up to the first 10 years of a loan. Well, if you’re a first-time home buyer and you don’t plan to make your home a “forever” one, choosing an ARM over a fixed-rate loan can yield huge cash savings. So, which is better — ARM or fixed? When you’re shopping for a mortgage, the difference in mortgage rates between an adjustable-rate mortgage and a fixed-rate mortgage is known as the “spread.” The spread is your incentive for using an adjustable-rate mortgage instead of a fixed. Loan Type Mortgage Rate Payment Savings “Teaser” Period Savings 30-Year Fixed 4.875% $1,587 – – 5-Year ARM 3.750% $1,389 $198 $16,700 (in 5 years) 7-Year ARM 3.875% $1,410 $177 $20,600 (in 7 years) The savings of an ARM can be substantial while it’s in its teaser period. Another factor which determines whether you should consider an ARM is the length of time you plan to live in your home; and, the number of years until you might conceivably attempt a home loan refinance. The difference in mortgage rate between a fixed rate loan within loan limits and one that’s outside of loan limits can be as high as 150 basis points (1.50 percent).

How Much the Average House Costs in Each State

Here’s a look at the average home costs in each state in 2018. Alabama The average home price is $199,020. If you’re considering a move to the state, your best destination may be Birmingham, according to Housingpredictor.com. Their research points out that the city is a major hub for construction, banking, medical research, and more. The downtown is vibrant, with trendy stores and gourmet restaurants. Better still, there is an inventory of homes in the $80,000-$100,000 range. Alaska The state has a steady average home price of $286,438. Be wary: According to a report by the Alaska Journal of Commerce, the Anchorage housing market may be about to slide. Arizona The average home price is $286,067. Although Phoenix got hit hard when the housing bubble burst, the area’s sales last year tell the recovery story.

This is why Americans are losing confidence in the housing market

Today, less people are buying houses. Looking back to 2013, when 54% of consumers were confident in the housing market, it feels like a lot has changed in a small amount of time. The housing market is far from a perfect science, but there are some trends that could be influencing homeowner behavior and confidence such as: Rising house prices Salary stagnation Generational trends Record high interest rates All of the above have hurt consumer housing confidence. This data is not reflective of metropolitan areas alone, and, in fact, this trend should concern any prospective homeowner regardless of location. Rising home prices would be a reasonable outcome of inflation, but only as long as salaries grew proportional to the housing market. When it comes to the newest generation of homeowners, many young people are buying in to never buying a house. Financial inhibitors aside, there is a more universal reason millennials aren’t buying houses: young people simply have a different set of values. In fact, 91% of millennials expect to stay at one job for less than three years. Record high interest rates Mortgage interest rates have reached an all time high of 4.66% — an entire percent higher compared with this time last year, and a record high since 2011. High interest rates prevent mobility — someone who might have owned three houses in a lifetime will generally stick to one to avoid unreasonably high interest payments.

What Can Cause The Next Mortgage Crisis In The U.S.?

Delinquency rates started surging after home prices started falling. By 2008, some homeowners were seriously "underwater" - they owed more on their house than the house was worth. But home prices are an indicator of default risk. The New York Fed: Over the first half of the 2000s, U.S. household debt, particularly mortgage debt, rose rapidly along with house prices, leaving consumers very vulnerable to house price declines. Homeowners in the sand states were much less levered in 2005 than those in other regions, yet as home prices reverted to their mean, the leverage of these homeowners rapidly increased and extremely high mortgage defaults followed. In fact, according to research cited by the paper, negative equity is a "necessary condition" for mortgage default: Negative-equity loans represent a pool of default risks: If the borrowers are hit with liquidity shocks resulting from, say, a lost job, then default may be the only viable option. Positive-equity borrowers faced with liquidity shocks, on the other hand, are generally able to sell the property and avoid default. It all boils down to this: There can be no mortgage crisis unless home prices decline enough in some markets. And given how inflated home prices are in many markets, and that mortgage rates are now climbing, any reversion toward the mean of home prices in those markets would cause the delinquency rate to do a beautiful "déjà-vu all over again," so to speak. That low national delinquency rate these days, often touted as a sign of low risk in the housing market, has zero meaning as an indicator of risk for the most vulnerable households when the prices of their homes begin to drop.

Non-Traditional Credit Options For Mortgage Applicants

Bruce Marks, CEO of the non-profit NACA that provides loans to low credit score borrowers, says his company relies on non-traditional credit metrics frequently so I spoke with him to get an idea of what lenders are looking for. Rental Income: This is one lenders will look to first so this is the top priority for making sure you have a documented history of on-time payments. But make sure any changes to the monthly payments have a documented explanation (random example: if you and your ex agree that you'll pay for all of summer camp and travel for the kids rather than paying child support directly to your ex, make sure you have the bill from summer camp in your files so you can show a lender you didn't skip out on payments for a few months). Gig Economy income: In the eyes of some lenders, a steady monthly income from a job such as driving for Lyft or delivering packages for Amazon can be almost as good as a job in from a traditional employer. But it needs to be more than just a few recent months of income. "You look at stability of income. Savings/Practice payments: If you are stashing away money for a downpayment it can help to set up transfers out of your checking account as though they were a regular mortgage payment. If you have extra to put away there's no harm in making extra deposits, but a regular withdrawal that you don't dip in to shows a lender you're ready for a mortgage. It's better if the bill is one that is paid monthly as opposed to quarterly (such as water or sewage bills, which typically only bill a few times a year). If you have any other ideas for non-traditional options to add to the list email me at amydobsonRE@gmail.com or tweet me @amydobsonRE.

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How to save $9,000 on your mortgage

The general rule of thumb is to aim to have your monthly housing costs add up to less than 30% of your monthly before-tax income. The better your score, the more likely you are to get a lower interest rate, which means you will be paying less over the life of your loan. Home buyers with credit scores below 620 tend to have very high interest rates and risky features on their home loans, according to the Consumer Financial Protection Bureau. "It means that for a couple years before you really want to purchase a house, you start working to get your score as high as possible, said Nicole Theisen Strbich, a certified financial planner and director of financial planning with Buckingham Financial Group. That means paying an extra $9,000 over a 30-year mortgage. Put down a large down payment The larger your down payment, the less you need to borrow and the smaller your monthly mortgage payments will be. If you can put down at least 20% of the home price, you can also avoid paying private mortgage insurance — which protects the lender in case you default — saving thousands of dollars a year. Think shorter The 30-year fixed rate mortgage is the most common home loan, but there are other options available. "The extended maturity on the loan gives buyers a lower monthly payment, but it may in reality cause them to buy more of a home than they can afford." A 15-year mortgage comes with higher monthly payments, but also has a lower interest rate, which can bring significant savings.

Rental Rates on the Rise