Lee Morof's Real Estate Blog

For many homebuyers who are new to the market, it can be very comforting to be on a fixed rate mortgage where fluctuating interest rates cannot have an impact on your monthly payments. While a variable rate mortgage can sometimes lead to significant savings at the end of the day, there are a few ways you can tell if your monthly payment is on the upswing.

An Increase In Your Home’s Value

A marked increase in a home’s value is ideal for most homeowners who consider their home an important investment. However, the downside of an increase in the price of real estate is that your property taxes will probably be bumped up along with it. According to Josh Moffitt at Silverton Mortgage, “If your home value increases because of market conditions, taxes will follow, and it will cost more to insure the home.” In order to determine if a higher payment is on the horizon, you may want to take a look at the listings in your neighborhood.

A Miscalculation

Most people hope that a re-assessment of the value of their home will lead to a bump in its price, but if your monthly mortgage payments were calculated at a specific time during the transaction, this bump may mean a higher monthly payment for you. If there was some overlap between the assessment and the property transfer, or other fees were included in your payment, your tax professional should be able to advise you on the best course of action you can take come tax time.

Insurance Renewal Is Up

In the event that the homeowner’s insurance on your home is about to expire, there’s a possibility that you’ll be paying a bit more following renewal. Instead of leaving this to chance, ensure that your insurance company is communicating with you and keeping you abreast of changes. After all, while insurance is important to protect your investment, you have the option of looking into other insurance providers who may be able to give you a better rate.

It can be hard to plan for the increase in rates that can go along with a variable rate mortgage, but if your insurance is up for renewal and the value of the homes in your area has increased, a higher monthly payment will likely follow. Contact your trusted real estate professional for more information.

Making the decision to purchase a home is one of the most significant investments most people will make in their life, and this automatically means there are a lot of questions that need to be answered before putting any money down. If you’re considering making the leap, here are some insights into some of the common questions you might have.

How Much Should You Put Down?

While many homebuyers have the option of putting as little as 3% down in order to purchase a home, there are benefits to saving up for a down payment and putting in 15 or 20%. Because your interest rate will be higher on a lower down payment, putting more down can mean a lower overall price tag and monthly payment.

Fixed or Variable Rate Mortgage?

While a fixed rate mortgage can be good for homeowners who are new to the market due to its stability, a variable rate can be hard to rely on because it can change all of the time. Fixed rates can end up costing more than variable rates in the event of low interest rates, but it’s important to determine your comfort level with the market is before deciding on your mortgage type.

How Will The Lender Assess You?

There are a number of different factors that lenders will assess you on including your income, personal debt load, employment and credit history. While it’s important to be in the good books for these reasons, a lower credit score does not mean you will not be able to qualify for a mortgage; it simply means that you may need to provide a higher down payment.

What Will The Monthly Payment Be?

One of the conundrums of home ownership is being able to determine what you’ll actually be paying per month to purchase your home, but this number is dependent on the size of your mortgage, your interest rate, and the frequency of your payments. There are also many handy online tools you can use to provide some estimates but it’s best that you consult your mortgage specialist about this.

Most homeowners, particularly those that are new to home ownership, have many questions when it comes to purchasing a home, but by being aware of what a lender looks at and what you should put down, you’re well on your way to a healthy attitude towards ownership. If you’re currently considering buying a home, contact your local real estate professional for more information.

When you’ve finally found the home you’re looking for at the right price, it’s easy to think that the hard part is over; however, there’s still a lot to do in order to ensure your purchase goes through without a hitch. If you’re tying up the loose ends on your home purchase, here are some things you should do to avoid any unnecessary delays.

Hire A Legal Professional

However much research you may have done in regards to buying a home, there’s still a lot of legal jargon in the closing documents that can be difficult for most people to understand. Instead of doing guesswork, you may want to use an attorney who will take the difficulty out of the documents for you so there will be no holdups with the paperwork.

Arrange A Home Inspection

A home inspection is a necessary step before the sale of a home, but this is an important one to get out of the way because it can seriously impact your home purchase. Because major problems can often be discovered during inspection, getting this out of the way and deciding if an item should be fixed or the total price knocked down will ensure there are no delays at the last minute.

Acquire Title Insurance

In order to make sure your property really belongs to you, it’s a good idea to have a title search completed to see if there are any claims to your future property that could invalidate your purchase. As this is a legal safeguard for your claim to your home, it will help you avoid unnecessary issues in the event of an unknown property claim.

Determine The Closing Costs

An escrow company is responsible for holding the funds until all aspects of a home sale are complete, but there are fees that go along with this service. Before you get to the end of the process, determine what exactly the company will be charging so that you can be prepared for the final total. While fees are legitimate, if you see a higher tally than expected, you may want to negotiate for a reduced cost.

Purchasing a home is a significant investment full of hurdles you might not be aware of, but by acquiring title insurance and having a legal professional look through your documents, you can make your home purchase go a little smoother. If you’re planning on purchasing a new home soon, contact your local real estate professional for more information.

Once you’ve purchased a home and decided on a move in date, it may seem like a lot of the hard stuff is over, but you still have one of the most important things relating to such a large purchase to think about: the payments! If you’re looking for a few tips on ways to approach your monthly payment, the following will steer you in the right direction so you can broach your mortgage schedule successfully.

Set Up A Payment Schedule

Many people have been in the situation of neglecting their phone or credit cards by forgetting about the payment due dates, but this can cause a lot of strife when it comes to an investment as large as your home. Instead of leaving it to chance, choose a day each month and ensure that your bank is transferring the funds over automatically so you never have to worry about missing a payment. This will help you retain a reputation as a responsible borrower and it means you won’t have to deal directly with this important expenditure each month.

Be Aware Of Ways To Pay

Instead of being in the dark about ways to pay your mortgage each month, talk to your bank about your options for making your monthly payments in a timely, hassle-free manner. Before you get into the nitty-gritty of home ownership, look into this as soon as you’ve signed off on the papers so you know the best way to approach each month. This will prepare you for your approximate total mortgage payment.

Is It Really Affordable?

If you’re associated with a lender you trust, you’ve probably already been made aware of the amount of house you can and can’t afford, but ensure you’ve sat down and thought about what all the added interest on your home means. While it can certainly be a huge financial commitment for anyone to commit to a monthly mortgage payment, being able to swing the expense consistently is the difference between financial well-being and a purchase you’ll come to regret.

Making the decision to invest in a home can be one of the most exciting things you’ll commit to in adulthood, but ensure you’re aware of just what your monthly mortgage means so that it’s not something you’ll look back on. If you’re currently on the market for a home, contact your local mortgage professionals for more information.

Home ownership may be one of the most familiar goals of adulthood, but there’s more than one reason why so many people flock towards this type of investment and leave the rental market behind. If you’re trying to decide if you should make the big plunge towards buying, here are some benefits of saving up for a down payment and finding the right place to settle in.

It’s More Economical

Many people eschew home ownership simply because it can be hard to wrangle together the funds for a down payment. However, while a monthly rental is money you’ll never see again, the money you put down on a mortgage is being invested back into your home, making for a solid investment you can capitalize on later.

Instant Tax Deductions

The interest that you pay on your mortgage payment can be one of the most tumultuous aspects of purchasing a home, but you may not know that you actually have the ability to deduct many associated costs on your taxes. From origination fees to property taxes, there are plenty of costs that go along with your home that can be claimed for a refund when tax time comes!

Paying A Lower Price

The real estate market fluctuates every day, but one thing is for the certain: the median price of a home is on the rise. While low inflation rates may not be ideal if you’re selling, they can mean a better deal if you’re delving into the market for the first time. Just remember, it’s important to buy a home you can afford as anything that goes beyond your budget is not a solid investment.

A Built-In Savings Account

It may be important to have liquid assets outside of the equity you have in your home, but many people struggle to pay off their home and save money at the same time. While saving outside of your monthly mortgage payment is still important, putting money down on a home is an act of investing, and it’s one you’ll likely make a solid profit on when you decide to sell.

There can be many financial benefits to renting in the short term, but purchasing a home is a more solid financial decision when it comes right down to it. If you’re considering a home and would like to know more about your options, you may want to contact one of our real estate professionals for more information.

From saving up for a down payment to sussing out the ideal lender, there are so many things involved in purchasing a home that can make it seem like a rather complicated undertaking. However, like a lot of things in our lives, technology has streamlined the process in recent years. If you’re currently searching for a home on the market, here are some new technological advancements that may make buying a little easier for you.

The Smart Phone Advantage

The paperwork and requirements associated with a mortgage may not have changed much in recent years, but smart phones have provided us with the instant ability to see all the necessary documents from anywhere. While there was once a time it required a lot of time in front of a computer, smart phones have enabled people to fill in, review and reply to documents on the go, which makes for a much more efficient – and mobile – process.

The Implementation Of The E-Signature

It may seem like something that has been around for a while, but up until recently an approving signature on a document had to be provided in person. With all the mortgage documents that are needed to get the ball rolling, this type of approval took up a lot of extra time. Nowadays, instead of having to rush out to sign a paper, our mobility and legal laws enable anyone applying for a mortgage to be able to provide an e-signature, which means there is no waiting around on the backend.

Consult Your Local App

Almost everything has an app these days, and the mortgage process is no different. While there is still a lot of paper and information required in order to get approved, the growing availability of mortgage apps enables you to instantly determine how much your monthly payments will be and what the real cost of your home is when it’s all added up. Instead of the guesswork, these apps can help you answer the question of whether or not a home is the right price.

The mobility and ubiquitous nature of today’s technology has made a lot of things much easier, and the mortgage process is no exception. From apps that can better manage your mortgage to the use of e-signatures, there’s no reason getting a mortgage loan has to be rife with stress. If you’re looking into buying a home, please contact one of our real estate professionals for more information.

So you’ve been a homeowner for some time. You’ve been faithfully paying off your mortgage for years, and you have a fair bit of equity built up in your home – and that makes you proud. But now, you’re wondering what good equity is if you’re not using it.

How do you actually use home equity? And how do you leverage it to get a high return for low risk? Here are just a few options you may want to consider if you’re looking for something to do with your equity.

Use A Home Equity Loan Or HELOC To Pay Off High-Interest Debt

If you have a certain amount of money invested in your home, you can borrow against that investment by taking out a home equity loan or a Home Equity Line of Credit (HELOC). A home equity loan is ideal for borrowing a large amount of money for a specific purpose, whereas a HELOC works much the same way a credit card does – you can use credit as needed, then pay back what you owe. And if you have a lot of high-interest debt, one of these vehicles could be a great way to pay off your creditors – while it may seem like borrowing from Peter to pay Paul, you actually save thousands of dollars in interest rates by paying off high-interest debt using a lower-interest HELOC or home equity loan.

Buy An Investment Property With A Home Equity Loan

If you’ve been looking to enter the real estate investment market but haven’t had the liquid funds for a deposit, leveraging your home equity in the form of a loan can get you into the landlord game quickly and easily. This is a smart move because while you are taking on more debt, you’re doing so in order to create a new income stream. Ideally, you’ll want to buy a duplex or a home with a granny suite so that you can maximize your investment by renting out more than one dwelling space.

Downsize To A Smaller House And Invest The Difference

Perhaps you’re living in a large house that has seen its value appreciate in recent years, and you’re looking to move in the near future. Selling your large home and moving into a smaller, less expensive home is a great way to simply turn your home’s equity into cash – cash that you can invest.

Leveraging your home equity can be a smart move if it’s done with a larger goal and a solid strategy in mind. But when done irresponsibly, taking equity out of your home can have severe consequences. Talk to your local real estate professional today to learn more about smart options for leveraging home equity.

Making renovations that are energy efficient is not just a great way to reduce energy output, but it’s also an effective way of decreasing monthly utility costs. It serves as a one-time investment that will save money in the long run.

However, renovations are costly and not everybody has the extra finances required to make energy efficient changes. This is where the VA’s energy efficient mortgage (or EEM) program comes into play.

The program is designed to allow veterans to apply for a new mortgage or refinance an existing one with extra funds to renovate the home to be up to energy efficient standards.

The Three Tiers Under The VA’s Energy Efficient Mortgage Program

The VA has three tiers for the cost of renovations to be done under the EEM program. The lowest, and easiest to be accepted for, is for improvements that will total under $3,000. A list of costs or a contractor’s quote may be required in the application process.

The second tier is for renovations that will cost between $3,001 and $6,000. This will require the homeowner or homebuyer to get a Home Energy Rating System report to detail how efficient a home is currently and what can be done to decrease its HERS rating.

The final tier is for any improvements to the home that will cost over $6,000. This is the most difficult tier to receive acceptance for as both the Department of Veterans Affairs and the private lender will need to approve the renovations.

Types Of Improvements Under The EEM Program

The program covers a variety of renovations for the home. These include: new insulation to walls, floors and ceilings, solar powered heating and cooling systems, thermal doors, thermal windows and new caulking and weather stripping.

There are also items that will not be covered by the program, including new roofing, vinyl siding and air conditioning units.

Using The EEM Program To Receive A Larger Loan

Any veteran or currently active military member looking to buy a brand new home can still benefit greatly from the energy efficient mortgage program. If a new home undergoes a HERS report and passes as being energy efficient, this can be applied to a VA mortgage to receive as much as $6,000 extra on the loan.

Speak with your local mortgage professional to go into more detail on the intricacies of refinancing under the EEM program and whether or not your home will qualify. 

Buying a home isn’t cheap – and even though mortgage rates are low, your own financial circumstances may mean that your monthly payment is more than you can afford. Whether you’re a new buyer looking to save money or a cash-strapped owner who needs to free up extra income, there are several ways you can lower your monthly payments – here are just five of them.

Make 13 Payments Every Year

If you have some extra money and you’re looking to pay down more of your principal amount, making 13 annual payments instead of the usual 12 is a great way to not only reduce what you owe, but also lower your monthly costs. Most lenders will allow you to make one additional lump sum payment per year on top of your regular monthly payments. Pro tip: Combine your tax refund and Christmas bonus into one big lump sum to pay down your mortgage.

Still Paying PMI? Ask Your Lender To Cancel It

Private mortgage insurance is a standard cost that you’re legally obligated to pay if your down payment was less than 20% of your home’s value. But once you’ve paid off that 20%, you’re no longer required to have PMI on a conventional mortgage. If you’ve built up 20% equity, talk to your lender about removing PMI from your mortgage agreement – it could save you thousands.

Recast Your Mortgage

If you’ve been diligently paying your mortgage for years but suddenly run into money problems, recasting your mortgage is a great way to make your monthly payments easier to manage. Recasting is fairly simple – it takes your remaining loan balance and stretches it across your original loan term. For example, if you’re 15 years into a 30-year mortgage that has half of its balance remaining, you can recast your mortgage to pay off the balance over another 30-year period.

Facing Financial Hardship? Get A HAMP Modification

If you encounter financial hardship, you can ask your lender if they offer a Home Affordable Modification Program (HAMP). HAMP is a government program designed to make housing more affordable for low-income citizens. It’s possible to save a significant amount of money with a HAMP modification.

Contact your trusted real estate professional to learn more about getting the most from your home financing.

Finding the right mortgage can be a struggle. There’s a wide array of mortgage products on the market, and you don’t always need to get a mortgage through your bank – and with so many options, it’s hard to know which one is your best bet.

Your ideal mortgage will depend on your own individual financial situation, but when you understand how different kinds of mortgages work, it’s easier to choose the right one. Here’s what you need to know about mortgage types.

Fixed-Rate Mortgages: Home Financing At A Guaranteed Rate

A fixed-rate mortgage is exactly what it sounds like: A mortgage with a fixed interest rate. With a fixed-rate mortgage, your interest rate is locked for the life of the mortgage loan and cannot change.

When interest rates are at historical lows, a fixed-rate mortgage is an ideal financing option. By purchasing a fixed-rate mortgage at a low interest rate, buyers lock in low payments and are protected from sudden rate increases. However, fixed-rate mortgages are more difficult to qualify for when interest rates are high.

Variable-Rate Mortgages: Lower Rates And Larger Loans

A variable-rate mortgage is a mortgage wherein the interest rate fluctuates over time. Typically, the interest rate will stay constant during a set period of time near the start of the mortgage, and then start to vary. These mortgage rates rise and fall in line with the prime lending rate.

The major advantage of a variable-rate mortgage is that its lower initial rates and payments allow buyers to qualify for larger homes. Buyers can also take advantage of falling interest rates without having to refinance. However, variable-rate mortgages can quickly become expensive if interest rates see a sharp rise – and while some mortgages put caps on the maximum annual increase, these caps don’t usually apply to the first rate change.

Interest-Only Jumbo Mortgages: Flexible Terms For Wealthy Buyers

An interest-only jumbo mortgage is a specialty mortgage designed specifically for wealthy buyers purchasing luxury homes. The major advantage of this kind of mortgage is that borrowers can make interest-only payments for the first 10 years of the loan. However, interest-only mortgages are typically only available to well-heeled buyers who can afford a hefty down payment and prove that they have large cash reserves.

Finding the right mortgage can be a challenge. That’s why it helps to consult with a mortgage advisor who understands the terms and rates, and can negotiate a great deal for you. For more information, contact your trusted real estate professional.