Concerned About Rising Mortgage Rates? Borrowers Have Options

(StatePoint) While mortgage interest rates remain near historic lows, they have been slowly rising over the last year, increasing the cost of 30-year loans for borrowers.

mortgageHome buyers concerned about higher rates have other options to consider: an adjustable rate mortgage (ARM), which provides an initial lower monthly payment, or a 15-year fixed rate mortgage, which has a higher monthly payment but reduces the amount of interest paid over the course of the loan.

A Shot in the ARM

An ARM typically starts out at a lower interest rate than the classic, 30-year fixed rate. After an initial period, typically five, seven or 10 years, the interest rate adjusts over the life of the loan.

There are several different types of ARMs, but one of the most popular is the 7/1, which stays at the same rate for the first seven years and then adjusts yearly thereafter.

“After the fixed period, the rate can increase each year, but the good news is that there are caps on how high that rate can go,” says Peter Boomer, head of mortgage distribution for PNC Bank. “The opposite may also be true: it’s possible the rate will decline if market forces are pointing that way. The best advice is to check with your lender for the details.”

What You Need to Consider

Boomer said it’s important to know how long you expect to be in your home.

“The national average is seven years before homeowners sell or refinance, which is why the 7/1 ARM is so popular,” he said. “If you expect to be in a home for fewer than 10 years, then you may want to consider an ARM.”

Boomer suggests talking with a mortgage loan officer about whether an adjustable rate may save you money. Many people like the idea of that lower rate to start, while others prefer the peace of mind of a stable rate.

For traditional mortgages, refinancing remains a viable option if interest rates fall in subsequent years.

“It’s important to remember that mortgage rates rise and fall over time. It may be worth considering an ARM because over time there may be savings, as opposed to the cost of refinancing,” Boomer says.

Look at your family, job, future and goals to decide whether this option makes sense. Your family may grow, you may get a new job and relocate, you may downsize for retirement or face other changing financial conditions.

15-Year Mortgage

Another alternative is a shorter term fixed-rate loan, the most popular being 15 years.

According to Boomer, while a 15-year mortgage will have a higher monthly payment than a 30-year fixed, the interest rate is typically lower and you pay back the principle faster, which means you can save money on interest over the length of the loan.

“The good news for consumers is that there are many financing options available. Talk to your loan officer to discuss which best fits your situation,” he says.

To learn more about borrowing options, visit pnc.com.

Owning a home is on the path to keeping your American dream alive, and exploring your options can help you more easily achieve it.   If you would like more information about homes in the West Essex area contact me and I will be happy to help you find the home of your dreams.

Top Tips and Decluttering Insights for Your Next Move

packing oneMoving can be emotional and the ways you manage it – including the downsizing of your possessions – may be influenced by your age, suggests a new study.

“From heirlooms to kitchen gadgets, moving is one of the few times in life when you’re forced to consider all your possessions and decide what goes and what stays,” says Pat Baehler, senior vice president, Mayflower Moving. “It can be a journey of ups and downs, from feeling brief guilt over purging gifts or older furniture, to pure joy in remembering the story behind a family heirloom and thinking of the memories you’ll soon make in your new home.”

Baby boomers (64 percent) and Generation Xers (60 percent) are more likely than millennials (53 percent) to put an heirloom in a safe place to pass along, according to the 2018 Mayflower Mover Insights Study, which explored different generations’ relationships with their belongings. However, millennials (17 percent) are more likely than Generation Xers (12 percent) and baby boomers (10 percent) to refurbish or repurpose an heirloom into something new.

The survey, conducted by Mayflower, which moves approximately 50,000 families annually, also explored how Americans feel about decluttering and purging unused items: 80 percent of survey respondents agree that clutter stresses them out, and half declutter their living space to feel more relaxed.

While such emotional stressors are often unavoidable during a move, the following tips from the experts at Mayflower can help you ease the logistical and financial burdens.

• Most people want to move on a Thursday or Friday, so if you can move earlier in the week there will likely be more availability. Likewise, it’s best to move in the early or middle part of the month, as well as to avoid summer — the busiest time for most moving companies.

• Prevent mishaps. Consider letting professionals pack breakable items.

• Help offset relocation costs by looking into programs such as CityPointe, provided by Mayflower, offering cash back on the sale and purchase price of your home.

• Of the millions of Americans that move annually, fraud occurs in as many as 3,000 cases. Don’t get scammed. Ask for a moving quote from three companies and don’t be hooked by the lowest price. If one estimate is much lower than the others, it could be a red-flag that the company isn’t legitimate. Generally, reputable moving companies will not require a deposit, so don’t pay up-front.

• Reduce energy spent packing and unpacking. While 57 percent of survey respondents say they’ll purge everything they don’t need before moving, only 44 percent have actually done this in the past. Luckily, there are both new and lucrative channels for doing so: 47 percent of Americans say they use some kind of online service, social site or app to help them declutter, 26 percent are considering selling unused items through a resale or consignment shop and 35 percent are considering selling unused items online, according to the Mayflower survey. For additional moving tips and tools, visit Mayflower.com.

Whether you’re a minimalist or a pack rat, smart strategies can mean a low-stress move.

(StatePoint Media)
PHOTO SOURCE: (c) SolisImages/stock.Adobe.com

Interest Rates are Rising: Should You Buy a Home or Wait?

(StatePoint) With heightened talk of rising interest rates, many prospective home buyers are understandably concerned about whether it’s the right time to purchase a home.

a707c989 (1)

Indeed, you may be wondering if you waited too long and let the historically low interest rates pass you by or if you can still find a dream home that fits within your current budget.

Experts say that it’s true that rates are at their highest in almost four years and that this year has been particularly rough, however, it’s not all bad news. Rates are still well below the levels seen 10, 20 and 30 years ago.

“Rates are still low by historical standards, helping make mortgage payments affordable for many, but your wallet might take a hit if rates continue to go up,” says Freddie Mac deputy chief economist, Len Kiefer.

How big will the hit be? Assume you buy a home with a 20 percent down payment, take out a $200,000 mortgage and are getting a 30-year fixed-rate mortgage. At a 4.5 percent interest rate, your monthly payment would be $811 with total interest paid over the life of the loan being $131,851. With a 7.5 percent interest rate, your monthly payment would be $1,119 with a total interest paid of $242,748. With an 18 percent interest rate, your monthly payment skyrockets to $2,411 with a total interest paid of $708,081.

If rates jump a half percentage, you’ll pay a bit more each month, which isn’t ideal, but the added expense will unlikely be a deal-breaker. However, if rates jump to the levels they were in 1981 (an average of 18 percent), you can expect to pay a whopping $1,600 more per month, which may cause you to think twice about taking the plunge into home ownership.

To find out how much you’ll pay, check out Freddie Mac’s free Fixed-Rate Mortgage Calculator at calculators.freddiemac.com. For other free tools and resources, visit myhome.freddiemac.com.

Don’t let current rising interest rates prevent you from buying a home this year. Experts suggest that while rates have risen recently, historically speaking, it is still an overall great time to buy.

Are Common Myths Holding You Back from Buying a Home?

(StatePoint) Aspirations of home ownership is strong for America’s families, yet findings from the fifth annual America at Home survey from NeighborWorks America indicate several perceived barriers to home ownership among the majority of consumers.pexels-photo-106399.jpeg

Findings from the survey, which consisted of 1,000 U.S. adults and 500 millennials include many misconceptions about what it takes to buy a home:

  • The average millennial mistakenly thinks the minimum required down payment is 21.6 percent.
  • Approximately 73 percent of all consumers and 62 percent of millennials said they were not aware of or are unsure about down payment assistance programs in their communities for middle-income home buyers.
  • Seventy percent of adults feel they don’t have enough money saved for a down payment.

Experts believe that confusion about down payment requirements and lack of awareness about assistance programs are holding back many people from pursuing homeownership. “Before deciding if owning a home is right for you, take time to understand your down payment options, and separate myths from facts,” says Freddie Mac Vice President, Danny Gardner.

For example, the average down payment among first-time home buyers in 2016 was just 6 percent and, for repeat buyers, just 14 percent. What’s more, mortgage options, such as Freddie Mac’s Home Possible Mortgages, make it possible for qualified borrowers to put down as little as 3 percent.

If your down payment is less than 20 percent with a conventional loan, you’ll have to pay private mortgage insurance, an added insurance policy that protects the lender if you are unable to pay your mortgage. However, mortgage rates — despite their rise in recent years — remain at historic lows, providing you with a significant advantage.

There are also millions of dollars available for down payment assistance. A great place to start is right where you live. Many state, county, and city governments provide financial assistance for people in their communities who are well qualified and ready for home ownership.

To help demystify down payments and the home buying process, free tools and resources are available at myhome.freddiemac.com.

Don’t let misconceptions hold you back from pursuing home ownership. Check out the facts to learn how much home you can afford.

Is it time for you to make your move?  Email me at kim.fiore@century21.com  to get started.

How Much Home Can You Afford this Spring?

How Much Home Can You Afford this Spring?

Factors to Consider

house dream(StatePoint) The chicken or the egg? Which came first continues to fuel philosophical debates. But when it comes to buying a home, experts are pretty clear about the proper order of things — agreeing you should fit your mortgage to your finances, not to a house.

“Before you even start your search for a home this spring, it’s crucial to know how much you can afford to pay each month,” says Freddie Mac Senior Vice President, Christina Boyle, who stresses that there are a few important things to keep in mind as you calculate this figure.

Start by getting a handle on your finances. What do you earn? What do you spend? How much do you have in savings? Answering these questions will help you better understand how much home you can afford. Make a budget and use free online tools and calculators to determine how much you can afford.

Remember that your monthly expenses go beyond mortgage payments, so leave some room in your budget. Whether it’s a new roof or a leaking faucet, homeownership can mean unexpected expenses. Be prepared to pay for such items, as needed. General maintenance, combined with utilities (an expense that can vary by home depending on its size and other factors), are added expenses to consider. Some neighborhoods also have homeowners’ association fees to cover the cost of upkeep of common spaces.

Your lifestyle can also help you assess whether a particular home is right for you and your budget. Location is key in determining what you can afford. Some points to consider are whether you want to live in a suburban or urban setting, whether you need to be near specific schools and public transportation, and the potential length of your commute. These factors can affect the cost of a home and you should determine your priorities in advance of home and mortgage hunting.

Remember, getting pre–approved can help you act fast and make a confident offer, so talk to your lender now before you start shopping.

A full rundown on all things home buying, including free tools and resources, is available at myhome.freddiemac.com.

This spring, be sure to prepare yourself for the home buying experience by being well-informed and aware of what you can afford.

Is it time for you to make your move?  Email me at kim.fiore@century21.com  to get started.

How to Find the Right Home Mortgage So You Don’t Overpay

0000_413370506_medium

(StatePoint) Ample bedrooms and bathrooms? Check. A roomy kitchen? Check. A nice-sized backyard, storage space in the attic and just the right amount of curb appeal? Check, check and check.

Once you’ve found your perfect home, the next step is finding the right mortgage — which can sometimes feel like you’re competing in a contact sport, being blindsided by confusing requests or financial surprises as you go through the application process.

According to the U.S. Census Bureau, 63.7 percent of Americans own their home. But getting there wasn’t necessarily easy. A 2017 NerdWallet survey reports that 42 percent of homeowners felt the home-buying process was stressful, a third said it was complicated, and 21 percent found it intimidating.

To help make you a mortgage all-star, Ally Home has created “The Mortgage Playbook,” a free, easy-to-read resource. Authored by members of the Ally Home Team, a dedicated group of loan experts, the “Playbook” features four sections that cover the entire field — from a getting-started game plan to approval and closing on a mortgage. It also breaks down confusing financial terms, helping applicants avoid pain during the home buying process.

To help you prepare for your mortgage game day, here are three top tips from the experts at Ally:

• Maximize your financial fitness. There are five steps consumers should take to improve their “financial fitness” before applying for a mortgage. These include demonstrating stable employment, managing debt, paying down credit accounts, accumulating assets like savings or retirement accounts to boost credit histories, and reviewing (and correcting, if necessary) your credit reports.

• Know your numbers. Borrowers can take advantage of free online tools, such as the Affordability Calculator available at Ally.com, to determine how much house they can afford. Using two pieces of data — monthly income and monthly debt — a borrower can quickly calculate their debt-to-income ratio. In most instances, this ratio should not exceed 43 percent, meaning your monthly mortgage payment and other debt obligations (car loan, school loan, credit card payments) should not comprise more than 43 percent of your gross monthly income.

• Know what type of mortgage is best for you. One of the biggest decisions borrowers make is whether to get a fixed-rate or adjustable-rate mortgage. When interest rates are low, a fixed-rate mortgage may be the better option. But if interest rates are higher, an adjustable rate mortgage could make sense because its lower initial rate means lower monthly payments for a specific time period (usually five, seven or 10 years) before the rate could change.

For more valuable tips, visit ally.com/docs/bank/ally-home-playbook to download the complete “Mortgage Playbook.” This free resource was created by Ally Home, whose mortgage products are offered by Ally Bank, Member FDIC, Equal Housing Lender.

Just like you wouldn’t hit the field without training and preparation, don’t head into the home buying process without the right knowledge. Leverage free resources that can help you be prepared.

 

Keep Your House Cooler This Summer Without Air Conditioning

In 2017 most of us are making an effort to live a greener lifestyle. We also love to save money! Lisa Kaplan Gordon writing for Houselogic.com shares some great tips to keep our house cooler this summer

Want summer comfort but hate the AC? Follow these tips on how to keep your house cool without frosty air conditioning.

You don’t have to switch on the air conditioner to get a big chill this summer.

These tips will help you keep your house cool without AC, which will save energy (and avoid AC wars with your family.

Block That Sun!

When sunlight enters your house, it turns into heat. You’ll keep your house cooler if you reduce solar heat gain by keeping sunlight out. Close the drapes: Line them with light-colored fabric that reflects the sun, and close them during the hottest part of the day. Let them pillow onto the floor to block air movement. Add awnings: Install them on south- and west-facing windows to reduce solar heat gain by up to 77%, says the U.S. Department of Energy. Make your own by tacking up sheets outside your windows and draping the ends over a railing or lawn chair. Install shutters: Interior and exterior shutters not only reduce heat gain and loss, but they also add security and protect against bad weather. Interior shutters with adjustable slats let you control how much sun you let in. Apply high-reflectivity window film: Install energy-saving window films on east- and west-facing windows, which will keep you cool in summer, but let in warming sun in the winter. Mirror-like films are more effective than colored transparent films.

Open Those Windows

Be sure to open windows when the outside temperature is lower than the inside. Cool air helps lower the temps of everything — walls, floors, furniture — that will absorb heat as temps rise, helping inside air say cooler longer. To create cross-ventilation, open windows on opposite sides of the house. Good ventilation helps reduce VOCs and prevents mold.

Fire Up Fans

Portable fans: At night, place fans in open windows to move cool air. In the day, put fans where you feel their cooling breezes (moving air evaporates perspiration and lowers your body temperature). To get extra cool, place glasses or bowls of ice water in front of fans, which will chill the moving air. Ceiling fans: For maximum cooling effect, make sure ceiling fans spin in the direction that pushes air down, rather than sucks it up. Be sure to turn off fans when you’re not in the room, because fan motors give off heat, too. Whole house fans: A whole-house fan ($1,000 to $1,600, including install) exhausts hot inside air out through roof vents. Make sure your windows are open when you run a whole-house fan.

Power Down Appliances

You’ll save money and reduce heat output by turning off appliances you’re not using, particularly your computer and television. Powering down multiple appliances is easier if you connect them to the same power strip. Don’t use heat- and steam-generating appliances — ranges, ovens, washers, dryers — during the hottest part of the day. In fact, take advantage of the heat by drying clothes outside on a line.

Plant Trees and Vines

These green house-coolers shade your home’s exterior and keep sunlight out of windows. Plant them by west-facing walls, where the sun is strongest. Deciduous trees, which leaf out in spring and drop leaves in fall, are best because they provide shade in summer, then let in sun when temperatures drop in autumn. Select trees that are native to your area, which have a better chance of surviving. When planting, determine the height, canopy width, and root spread of the mature tree and plant accordingly. Climbing vines, such as ivy and Virginia creeper, also are good outside insulators. To prevent vine rootlets or tendrils from compromising your siding, grow them on trellises or wires about 6 inches away from the house. Speaking of shade, here are smart, inexpensive ideas for shading your patio. Want more tips for staying cool this summer? Substitute CFL and LED bulbs for hotter incandescent lights. Also, try insulating your garage door to prevent heat buildup.

Visit HouseLogic.com for more articles like this. Reprinted from HouseLogic.com with permission of the NATIONAL ASSOCIATION OF REALTORS®.

What do Increasing Interest Rates Mean to Homebuyers and Homeowners

By now you have heard that the Federal Reserve  has increased short term interest rates by 0.25%.  This is the first rate hike since 2006.  It is also predicted that there will be more small interest rate hikes to come.  What does this mean to you as a homebuyer or homeowner?  How will it affect your ability to get a mortgage or to refinance?

Homebuyers

As interest rates rise, it will be more difficult for homebuyers to qualify for a mortgage.  This is because lenders look at an applicant’s debt- to-income ratio, the percentage of an applicant’s monthly income that goes to paying debt. As the monthly payment goes up because of higher interest rates, the amount the borrower can borrow for a mortgage goes down. For example:

At 4% interest, a fixed rate 30 year $350,000 mortgage will require a monthly principal and interest payment of $1671.  At 5.5% interest, a fixed rate 30 year $350,000 mortgage will require a monthly principal and interest payment of $1987.  That is a difference of over $300 a month and might disqualify a borrower from qualifying for the loan.  Another way to look at this: if the lender calculated a borrower would be able to pay $1675 a month for principal and interest, at 4% the borrower could borrow $350,000, at 5.5% the borrower could only borrow $295,000.  The borrower would need a larger down payment for the same house or look for a less expensive home.   

These are just examples of what higher interest rates might mean to you.  You can calculate using your own numbers using the Zillow Mortgage Calculator.

Current Homeowners

Fixed Rate Mortgages

If you are holding a fixed rate mortgage, your rate will not change.  This rate was locked in when you closed on your home and will stay the same for the life of your mortgage.  If you decide to refinance or buy a new home though  you will probably see a higher interest rate.

Adjustable Rate Mortgages

If you have an adjustable rate mortgage (ARM) you need to ask yourself how long you plan on staying in your current home.  If you are thinking about staying for more than a few years, you might want to  look into refinancing  your ARM into a fixed rate mortgage.  Start shopping around now to find the best mortgage for you .  Keep in mind not only the interest rate but also fees and other costs associated with the new mortgage.

Home Equity Line of Credit

Adjustable rate home equity line of credit (HELOC) borrowers will be among the first to feel the interest rate increases as these loans typically adjust interest rates monthly.  If you are using this type of credit, you might want to speak to your lender about converting your HELOC into a fixed rate home equity loan.  You also might be able to include your HELOC balance if you are refinancing your primary mortgage.

 

To give you an idea of what refinancing would mean to you, look at the Zillow Refinance Calculator. This calculator will  help you  estimate the amount of money a refinancing could save you by comparing the details of your current home loan with new rates, terms, and other factors.

 

Taking the time now  to see how your housing costs will change as interest rates rise could save you a great deal in the short and long term.  It seems as though interest rates  are heading up, so now might be the best time to start your new home  search.  Do you have any questions about buying or selling a home?  Do you  want to know more about the communities of West Essex?  Fill in the form below or email me @ kim.fiore@century21.com and I will get right back to you.