Almost daily, a past customer, or new referral is calling my office to ask about a refinance. They usually begin the conversation with, "Is now a good time to refinance?" There will likely never be a better time than now.
With refinance rates around the 4% mark, this is a great opportunity for so many mortgage options (i.e., refinance, buy a second home, home improvement, debt consolidation, rate reduction, term reduction, purchase an investment property, etc.). Rates have never been this low in my lifetime.
If you look at buying power, a 4% rate on a $200,000 loan will save a customer about $88,000 over the 30 year life of the loan, versus a similar 6% rate. What could you do with $88,000? For investors, people purchasing residential properties for rental purposes, the cash flow potential for their property is significantly better.
The rental market, or fair market rent of a property, is driven by two factors, what the market will bear, and what a similar house could be purchased for at prevailing rates. If an investor purchases a home with a 4% rate, and then the mortgage market moves to 6.0-6.5% for new home buyers, then that investor will typically increase his monthly rent. If the renter can’t buy for what he is paying in rent, then the rental market remains strong. Although the property owner’s costs remained the same, he can typically charge more for the property and increase his profit margin.
Second homes are another strong market when interest rates get extremely low. Buyers are able to maximize their buying power, or minimize their monthly payment for a second home. Using a $200,000 loan at a rate of 4% versus 6%, the average borrower will save about $250 on the monthly payment at the lower rate. The monthly savings can be the decision maker about whether a second home is affordable or not.
While mortgage rates are low, many credit cards are still charging 18-22% for balances carried to the following month. Borrowers can consolidate debt and pay off those bills in a fraction of the time, saving thousands of dollars in monthly fees and interest.
If you have considered a refinance or purchase of real estate, now is the time to get off the sofa and make a call. While rates could drop in the future, you have definitely lost the opportunity if they go back up.
© 2011 Richard Swan
This blog is for informational purposes and is the opinion of the writer. In financial matters always solicit professional advice and legal counsel if necessary.
Showing posts with label selling a home. Show all posts
Showing posts with label selling a home. Show all posts
Wednesday, November 30, 2011
Wednesday, October 19, 2011
Bankruptcy and Foreclosure: How They May Delay Your Next Purchase
Almost all mortgage loan programs have restrictions on how soon after a Bankruptcy and/or Foreclosure you can purchase a new home. The minimum is typically 2 years after a bankruptcy and 3 years after a foreclosure; with re-established credit. The problem arises as to when those dates begin.
I recently had a customer that was three years past their bankruptcy discharge date and had re-established suitable credit. Their previous mortgage was included in the bankruptcy and was not contested by the lender. Unfortunately, they did not sign over their previous house to the lender with a quit claim deed and the lender went through the foreclosure process on the property. Although not contested by my borrower, the foreclosure process took 16 months to complete, adding 16 months before the clock even began running on their foreclosure.
Neither your attorney nor the judge understand the ramifications that a court proceeding may have on your credit and your ability to borrow in the future. I see this all the time with both bankruptcies and especially divorces. For now, let’s concentrate on the bankruptcy process.
During the bankruptcy, you can choose to either include the house losing the equity in your property, or you can choose to “re-affirm” that debt and continue with your payments. In my borrowers situation, they chose to walk away, not able to continue with the payments. What they should have done was to sign a quit claim deed and have it recorded, giving their rights in the property to the lender.
If you choose to re-affirm the debt, then there is also paperwork that you must complete with your lender. Otherwise, even though you never miss a payment, they will continue to report your mortgage as included in the bankruptcy and not show your current “good” payment history.
Your lawyer, and the judge, are only responsible for dealing with the matter at hand and do not look to see how that will affect you in the future. Speak with someone that understands how such an action can affect you going forward. If you know someone going through a bankruptcy or divorce, have them call me.
© 2011 Richard Swan
This blog is for informational purposes and is the opinion of the writer. In financial matters always solicit professional advice and legal counsel if necessary.
I recently had a customer that was three years past their bankruptcy discharge date and had re-established suitable credit. Their previous mortgage was included in the bankruptcy and was not contested by the lender. Unfortunately, they did not sign over their previous house to the lender with a quit claim deed and the lender went through the foreclosure process on the property. Although not contested by my borrower, the foreclosure process took 16 months to complete, adding 16 months before the clock even began running on their foreclosure.
Neither your attorney nor the judge understand the ramifications that a court proceeding may have on your credit and your ability to borrow in the future. I see this all the time with both bankruptcies and especially divorces. For now, let’s concentrate on the bankruptcy process.
During the bankruptcy, you can choose to either include the house losing the equity in your property, or you can choose to “re-affirm” that debt and continue with your payments. In my borrowers situation, they chose to walk away, not able to continue with the payments. What they should have done was to sign a quit claim deed and have it recorded, giving their rights in the property to the lender.
If you choose to re-affirm the debt, then there is also paperwork that you must complete with your lender. Otherwise, even though you never miss a payment, they will continue to report your mortgage as included in the bankruptcy and not show your current “good” payment history.
Your lawyer, and the judge, are only responsible for dealing with the matter at hand and do not look to see how that will affect you in the future. Speak with someone that understands how such an action can affect you going forward. If you know someone going through a bankruptcy or divorce, have them call me.
© 2011 Richard Swan
This blog is for informational purposes and is the opinion of the writer. In financial matters always solicit professional advice and legal counsel if necessary.
Friday, September 2, 2011
Is Now A Good Time To Buy A Home? Yes Virginia, It's a Great Time To Buy
The question that I have heard most over the last year echoes in my mind, “Is now a good time to buy a home?” My unequivocal answer is yes, but let me explain why I believe now to be a great time to buy.
The first and foremost reason is low interest rates. Borrowers can maximize their buying potential today, unlike any other time in modern history. Rates today are in the 4.0%-4.375% range for a 30 year fixed rate mortgage. At 4%, as opposed to 6%, on a $200,000 loan you will save $88,000 in interest over the life of your loan. That does not even take into consideration using the monthly savings (about 20%) to pay additional towards your mortgage each month to pay off your home early.
If you look at the difference in buying power, you can look at over a $250,000 house today for the same payment that a $200,000 house will cost you monthly; when rates rise back to 6%.
Secondly, home prices are very attractive. Many studies seem to indicate that we have reached the floor in home values. Some studies point to average home sale prices being comparable to 2003 values; this reflects a 30% drop in home values since June of 2006. While home prices vary from state to state, buyers are still able to find great deals and many foreclosed properties are still on the market.
While foreclosed properties appear very attractive based on their price, buyers should avail themselves of qualified professionals to evaluate the property. Many foreclosures suffer from deferred maintenance and may have problems that are far worse than they appear. Speak with a licensed contractor and obtain estimates on repairs during your evaluation process. While the price may seem attractive, repairs often push the property above the average sales price of similar properties on the market.
First Time Buyers and those currently renting benefit most of all from the current conditions, because they don’t have a property to dispose of at present. Many current homeowners’ have shown reluctance to take advantage of historically low rates, because of fear of selling their current home. This is a conversation to have with a Licensed Realtor. They can do a CMA (Comparative Market Analysis) of your home to determine a reasonable list price.
All in all, now is a great time to look at increasing your buying power in the real estate market. Low interest rates, coupled with low home prices, maximize your buying potential, allowing you to consider the home of your dreams.
© 2011 Richard Swan
This blog is for informational purposes and is the opinion of the writer. In financial matters always solicit professional advice and legal counsel if necessary.
The first and foremost reason is low interest rates. Borrowers can maximize their buying potential today, unlike any other time in modern history. Rates today are in the 4.0%-4.375% range for a 30 year fixed rate mortgage. At 4%, as opposed to 6%, on a $200,000 loan you will save $88,000 in interest over the life of your loan. That does not even take into consideration using the monthly savings (about 20%) to pay additional towards your mortgage each month to pay off your home early.
If you look at the difference in buying power, you can look at over a $250,000 house today for the same payment that a $200,000 house will cost you monthly; when rates rise back to 6%.
Secondly, home prices are very attractive. Many studies seem to indicate that we have reached the floor in home values. Some studies point to average home sale prices being comparable to 2003 values; this reflects a 30% drop in home values since June of 2006. While home prices vary from state to state, buyers are still able to find great deals and many foreclosed properties are still on the market.
While foreclosed properties appear very attractive based on their price, buyers should avail themselves of qualified professionals to evaluate the property. Many foreclosures suffer from deferred maintenance and may have problems that are far worse than they appear. Speak with a licensed contractor and obtain estimates on repairs during your evaluation process. While the price may seem attractive, repairs often push the property above the average sales price of similar properties on the market.
First Time Buyers and those currently renting benefit most of all from the current conditions, because they don’t have a property to dispose of at present. Many current homeowners’ have shown reluctance to take advantage of historically low rates, because of fear of selling their current home. This is a conversation to have with a Licensed Realtor. They can do a CMA (Comparative Market Analysis) of your home to determine a reasonable list price.
All in all, now is a great time to look at increasing your buying power in the real estate market. Low interest rates, coupled with low home prices, maximize your buying potential, allowing you to consider the home of your dreams.
© 2011 Richard Swan
This blog is for informational purposes and is the opinion of the writer. In financial matters always solicit professional advice and legal counsel if necessary.
Friday, April 29, 2011
Major Storms Across the Southeast Could Delay Your Closing
As many parts of the Southeast recover from a wave of storms that moved through the area, Realtors and Lenders may be surprised as their borrowers encounter additional costs and/or delays before closing. If you are currently in the process of buying a home, you may be contacted by your lender and told that you will have to have a re-inspection of your property completed by the appraiser.
Collateral is one of the main components in the lending process and in the case of buying a home, the structure itself is the value backing up the loan to protect the lender in case of default. Most lending guidelines have a disaster policy that goes into effect after major storms like, hurricanes, tornadoes, hail, etc. The purpose of these policies is to make sure that the home (the collateral) is still in the same condition as it was when originally appraised. As of this morning, the entire State of Alabama has been declared a disaster area by FEMA.
What that means for those in the middle of the loan process (in Alabama) is that the lender is going to require verification that the home is marketable at the same value and in the same condition as when it was originally appraised. Hopefully, this will just mean a short delay while the appraiser re-inspects the home. If the home was damaged, then repairs will have to be made and a possible decrease in value could occur.
If the property has not been appraised, then the appraiser is supposed to try and find comparables that have sold post disaster, or they must provide photos post disaster of the subject property and all comparables to show that no damage has occurred to either the home, or the comparable sales used in the appraisal report. As of right now, no areas in Tennessee have been declared “Disaster Areas” but as reports of actual damage are analyzed, this could be updated in the future requiring compliance. Make sure that you always deal with a lender that is on top of changes in their market and can anticipate these concerns.
As a Realtor, if you know that storms have passed through the area and caused damage to homes, you may want to be proactive with your buyer and ask the Home Inspector to re-inspect the property, just to make sure that the buyer is protected.
©Richard Swan 2011
This blog is for informational purposes and is the opinion of the writer. In financial matters always solicit professional advice and legal counsel if necessary.
Collateral is one of the main components in the lending process and in the case of buying a home, the structure itself is the value backing up the loan to protect the lender in case of default. Most lending guidelines have a disaster policy that goes into effect after major storms like, hurricanes, tornadoes, hail, etc. The purpose of these policies is to make sure that the home (the collateral) is still in the same condition as it was when originally appraised. As of this morning, the entire State of Alabama has been declared a disaster area by FEMA.
What that means for those in the middle of the loan process (in Alabama) is that the lender is going to require verification that the home is marketable at the same value and in the same condition as when it was originally appraised. Hopefully, this will just mean a short delay while the appraiser re-inspects the home. If the home was damaged, then repairs will have to be made and a possible decrease in value could occur.
If the property has not been appraised, then the appraiser is supposed to try and find comparables that have sold post disaster, or they must provide photos post disaster of the subject property and all comparables to show that no damage has occurred to either the home, or the comparable sales used in the appraisal report. As of right now, no areas in Tennessee have been declared “Disaster Areas” but as reports of actual damage are analyzed, this could be updated in the future requiring compliance. Make sure that you always deal with a lender that is on top of changes in their market and can anticipate these concerns.
As a Realtor, if you know that storms have passed through the area and caused damage to homes, you may want to be proactive with your buyer and ask the Home Inspector to re-inspect the property, just to make sure that the buyer is protected.
©Richard Swan 2011
This blog is for informational purposes and is the opinion of the writer. In financial matters always solicit professional advice and legal counsel if necessary.
Tuesday, February 1, 2011
Like Foreclosures, Short Sales May Prevent You From Buying a Home for Up To Seven Years
It seems like at least once a week, I get a call from someone either wanting to "Short Sale" their home, or someone about to buy one. Buying a Short Sale is fine, but make sure that when you make the offer, you have a letter from their current lender(s) that they will accept the price you have offered on the property.
Today's blog isn't about buying, but rather selling your home through a "Short Sale." What does that term actually mean. It means that the current lender is allowing you to sell the property and pay them less than what you actually owe on the current loan. Why would they do that? For the lender it can be a less costly option than going through the process of foreclosing on the property and then trying to list and sell the property themselves. It also allows them to decide right now what their loss will be. An offer in hand may be better than 4-6 months of lost payments, the expense of foreclosure, or listing the home and not getting an offer as high as what they are offered today.
What does it mean for the seller of the property. Current lending guidelines will not allow you to finance another home for at least 7 years after a foreclosure or short sale on a property. Many lenders offer home financing after a bankruptcy within 2-4 years, unless a home was involved in the process. If a home was lost due to a bankruptcy, then you could be looking at 7 years before you would qualify for another conventional or government insured home loan. This seven year prohibition from getting another loan is something that sellers are not being told when they try to sell their home through a "Short Sale."
What about the outstanding loan balance? When the lender accepts a payoff of the loan for less than what is actually owed, they can continue to show any loss as an outstanding balance that can be claimed for years to come. Why would they allow this? They allow the property to be sold to get out of the remaining balance on the loan and to eliminate the process of foreclosure. Taking a $10,000 loss now, may be less time consuming and less costly than holding onto the property and taking your chances. Banks manage losses on a daily basis and calculate the cost to sell the property versus the current loss on the loan. As a borrower, that doesn't mean that you are not still responsible for the outstanding balance. Read the documents closely and know the effect it will have on your credit in the future.
A short sale may be the right decision, but at least make it an "informed" decision.
This blog is for informational purposes and is the opinion of the writer. In financial matters always solicit professional advice and legal counsel if necessary.
Today's blog isn't about buying, but rather selling your home through a "Short Sale." What does that term actually mean. It means that the current lender is allowing you to sell the property and pay them less than what you actually owe on the current loan. Why would they do that? For the lender it can be a less costly option than going through the process of foreclosing on the property and then trying to list and sell the property themselves. It also allows them to decide right now what their loss will be. An offer in hand may be better than 4-6 months of lost payments, the expense of foreclosure, or listing the home and not getting an offer as high as what they are offered today.
What does it mean for the seller of the property. Current lending guidelines will not allow you to finance another home for at least 7 years after a foreclosure or short sale on a property. Many lenders offer home financing after a bankruptcy within 2-4 years, unless a home was involved in the process. If a home was lost due to a bankruptcy, then you could be looking at 7 years before you would qualify for another conventional or government insured home loan. This seven year prohibition from getting another loan is something that sellers are not being told when they try to sell their home through a "Short Sale."
What about the outstanding loan balance? When the lender accepts a payoff of the loan for less than what is actually owed, they can continue to show any loss as an outstanding balance that can be claimed for years to come. Why would they allow this? They allow the property to be sold to get out of the remaining balance on the loan and to eliminate the process of foreclosure. Taking a $10,000 loss now, may be less time consuming and less costly than holding onto the property and taking your chances. Banks manage losses on a daily basis and calculate the cost to sell the property versus the current loss on the loan. As a borrower, that doesn't mean that you are not still responsible for the outstanding balance. Read the documents closely and know the effect it will have on your credit in the future.
A short sale may be the right decision, but at least make it an "informed" decision.
This blog is for informational purposes and is the opinion of the writer. In financial matters always solicit professional advice and legal counsel if necessary.
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