Grandview Lending Blog

Tips for Selling Your Home Online

2012-02-16T09:00:00.000-05:00

Didyou know that 92% of homebuyers start their house hunt on the Internet? And ifyour online listing isn’t compelling enough, they will never even come to seeyour home.

Recentlyon a TODAY show appearance, real-estate expert Barbara Corcoran talked aboutthe importance of marketing your home online. She says the Internet “is wherethe battle to sell a house is fought every day.”

First,Corcoran says you need to make sure your real estate agent is posting your homefor sale on the top five real-estate search engines:

Byposting on these sites, your listing will pop up at the top of the search pageinstead of being buried deep within the listings and never looked at.

Second,Corcoran says curb appeal, in the old-fashioned sense of the word, does notexist anymore. Most homebuyers are doing their “drive-by” of your home online.Therefore, it’s essential to have good quality photos of your home online toshow its fullest potential.

Astudy by Trulia.com found that listings with more than six photos are twice aslikely to be viewed by buyers compared to listings with fewer photos.Therefore, you should include several photos of the interior and exterior ofyour home. For the best photos, you should:

Cropout sidewalks and streets in exterior shots.
Makesure the lawn is mowed, and the bushes and trees are trimmed.
Makesure the exterior of the house is well lit. But avoid shooting photos into thesun.
Removeany interior and exterior clutter.
Makesure your home looks “bright” when taking interior photos – open drapes andblinds, and turn on the lights.
Takeclose-up photos of interesting details, like the fireplace mantle.
Stageyour home like the magazine stylists do – place floral arrangements or fruit inbowls in rooms, and light a fire in the fireplace.

Besidesgreat photos, homebuyers want information about your home to help them decideif it is right for them. Therefore, you provide your Realtor with accurate,detailed information about your home and surrounding community.

Bycreating a good impression with compelling photos and information on thereal-estate websites, homebuyers will be more likely to schedule a viewing tocheck out your home in-person – which may potentially lead to an offer.

Ifyou’re in the market for a new mortgage, Grandview Lending is a trustedmortgage broker with years of experience. We are happy to discuss any mortgage options with you.

Obama Proposes New Mortgage Refinance Plan

2012-02-08T09:00:00.000-05:00

On February 1, President Barack Obama outlined hisadministration’s latest plan to help millions of homeowners refinance theirprivately held mortgages at lower interest rates. The plan would enableeligible borrowers to save about $3,000 annually if they refinance their loansthrough a Federal Housing Administration (FHA) program, which would guaranteethe new loan and assume the risk if the borrower defaulted.

The plan, if approved by Congress, would cost between $5 billionand $10 billion, depending upon participation. President Obama wants to pay forthe program by imposing a tax on large banks to finance the FHA’s insurancefund; however, proposals similar to this have failed to win support in thepast.

To beeligible for this refinancing program, borrowers must:

Have aprivate, non-government bank loan.
Be currenton their mortgage payments for at least six months. Plus, they cannot have morethan one late payment in the six months prior to that.
Have acredit score of at least 580.
Have amortgage balance that falls within the FHA loan limits in their communities – arange from $271,050 in low-housing cost areas to $729,750 in high-cost areas.
Own and livein the home covered by the loan.

President Obamaalso wants the program to require lenders to write down mortgage balances onloans that are deeply underwater – those in which borrowers owe more than 140%of their current home values. This reduction would lower the risk of theborrower defaulting.

Additionally,a program option would let borrowers refinance into 20-year loans. While thisoption may not reduce the borrowers’ monthly payments, it would enable them tobuild home equity quickly and pay off their loans sooner. To encourageborrowers to choose this option, the administration wants the FHA to pay forclosing costs for an additional savings of about $3,000 to homeowners.

This programtargets the 3.5 million homeowners who are not in default on their mortgagescurrently. However, it does not help the owners of roughly 3 million homes whoare at risk of foreclosure.

Theadministration hopes this program will bolster the housing market and free up cashto encourage consumer spending – thus helping the economy.

What are yourthoughts on this new proposal?

If you’replanning to refinance your home, contact a reputable mortgage broker to reviewyour specific situation with you to find the right solution for your needs.

Four Tax Deductions Homeowners Need to Know

2012-01-31T09:00:00.000-05:00

Buying a home can be a biginvestment. However, your home may provide you with tax advantages. Here’s alist of four common tax deductions for homeowners:

1. Mortgage InterestDeduction

In the early years of your mortgage, the majority of yourmonthly house payments goes toward interest. You may even have multiplemortgages – one for your main home and another for a second home or a homeequity loan. As long as the purpose for these mortgages is to buy, build orimprove a home, the interest is usually fully tax-deductible. The exceptions areif the interest on your mortgages exceeds $1 million, or the mortgage interestis for three or more homes. Your lender will issue you a Form 1098 for eachmortgage, which explains exactly how much you can deduct. Be sure to keep theseforms in case you’re audited by the IRS.

Note: If the loan is not a secured debt on your home, theinterest cannot be deducted.

2. Property Taxes

The second biggest tax deduction you can take is for thetaxes you pay on your home. Annual state and local property taxes can bededucted based on the assessed value of your property. However, property taxesare only deductible in the year in which they were paid. Also, if this is yourfirst year in your home, be sure to deduct your share of the property taxesincluded on your settlement or closing statement for your home.

3. Mortgage Insurance Premiums

Homeowners who purchase a home (a main or second residence)with less than a 20% down payment must carry private mortgage insurance (PMI).This insurance protects the lender if the homeowners default on the loan. Youmust itemize your deductions to claim the PMI deduction. You also need to havean adjusted gross income (AGI) of less than $100,000 for single, married orhead of household taxpayers, or $50,000 if married filing separately. Once yourAGI is above $109,000 ($54,000 for married filing separately), you no longerqualify for this deduction.

4. Points

When you purchase or refinance your home, points are thefees paid to obtain the mortgage. If this is your first year in your mainresidence, you can deduct the points you paid at closing on your tax return forthe year you paid them. If the seller paid some or all of the points for you,you may still be able to deduct them. Ask your tax advisor. If you refinancedyour mortgage, you can deduct the points proportionately over the life of thenew loan. Also, if you still had points you were deducting on a previousrefinance, you can write off the rest of the points in the year of the newrefinance.

Since taxes from owning a homecan be confusing, you should always talk to your tax advisor to determine whatdeductions apply to your particular situation. Also, make sure you keepexcellent records, so you can take advantage of deductions.

If you’re looking to buy a newhome or refinance in 2012, contact Grandview Lending. We can review yourparticular situation to find the right mortgage solution for you.

Beware of Code Violations on the Home You’re Buying

2012-01-24T09:00:00.000-05:00

Did you know that as a homebuyer you may be a liable for acode violation on the property you’re attempting to purchase?

Per an article in Chicago Tribune, codeviolations can often derail a home sale.

So what are code violations? These are violations and finesrecorded by a city or county’s code enforcement section against the property.The most common violations are unpaid property taxes and homeowner association(HOA) fees. In 16 states and the District of Columbia, HOAs can issue liensagainst the property which take precedence over any other liens – called asuper lien.

Additionally, violations can include issues with minimumbuilding construction standards, accumulated trash, improper care of swimmingpools, overgrown yards and landscaping, or even, noise complaints about barkingdogs.

Most violations occur when the previous homeowners wereinvolved in some kind of duress, such as bankruptcy and foreclosure. However,violations can occur at any time. Once a fine has been issued, if it goesunpaid, it can grow into a five- or six-figure penalty over time.

In many cases, the real estate agent or the bank may notknow about the violation until the property is in the escrow period. If a lienis recorded, then the title company should find it during the title search.Unfortunately, sometimes this happens a few days before escrow closing.

At that point, either the home seller or the homebuyer willhave to pay the fine and get any violations fixed. However, if the property wasa foreclosure, it’s sometimes not that simple. Ideally, in these cases, itshould be the bank’s responsibility to take care of the issues and pay thefine. But that doesn’t always happen. Then since the lien is against theproperty, it becomes the responsibility of the buyer. If the buyer acceptsresponsibility, he/she pays the fine and gets the violations fixed. If thebuyer won’t accept the responsibility, then the sale falls through.

So how can you determine if the property you’re buying hasany code violations? First, be sure to read the preliminary title reportcarefully to see if there are any liens or violations against the property.Second, you can obtain a code property inspection, which is different than a homeinspection. A home inspection reports on the condition of the home, while acode property inspection looks for building code violations and liens due toviolations. Also, be aware that code violations tend to be a bigger issue inreal estate markets that have high foreclosure rates and negative equity.

If you are buying a new home, contact a professionalmortgage broker to help you secure a mortgage loan that’s right for your needs.

Common Mistakes Mortgage Shoppers Make

2012-01-18T09:00:00.000-05:00

Buying a home, and getting a mortgage, is probably thebiggest financial decision you’ll ever make. Shopping for a mortgage isn’t likeshopping for car insurance or buying something at the mall. It’s a totallydifferent experience. Therefore, it’s best if you learn from other mortgageshoppers’ common mistakes so you can avoid making them yourself.

Calling and getting a quick rate quote. Unfortunately, ifyou do this, you’ll just be wasting your time. You need to find a lender who asksquestions, so he really understands your particular financial situation. Thisway the lender can find a mortgage solution that’s right for you.

Comparing apples to oranges. You may think you can call afew lenders over a couple days and get some quotes. The process just doesn’twork this way. The rates and costs are always fluctuating, so the quote you mayget is only good for that day until you lock the rates in. So you can’t trulycompare quotes unless you get them all on the same day within an hour or two ofeach other.

Getting an estimate without providing all the facts aboutyour financial situation. All the lenders you talk to need to have all of thesame information ( your credit score, down payment amount, loan size, type ofproperty, etc.) in order to analyze your situation and give you an accuratequote.

Working with a lender you don’t trust. You may encounterlenders who promise the “best deal.” Unfortunately, if it seems too good to betrue, then it probably is. You should always work with a reputable mortgage broker. Ask family members, friends or co-workers for recommendations oflenders they’ve worked with. Also check out the lender’s client testimonials.

Everyone wants the best deal, because no one likes tooverpay. Therefore, by following these tips, you’ll avoid making costlymistakes when looking for the right mortgage for your financial situation.

Ways to Avoid Foreclosure

2012-01-11T09:00:00.000-05:00

When homeowners buy a home, thelast thing they’re thinking about is losing their home to foreclosure. But inthe past few years, millions of Americans have lost their homes or are in theprocess of foreclosure. There are several reasons why homeowners may stopmaking timely mortgage payments, including loss of employment, divorce, suddenillness or medical emergencies, or inability to pay an adjustable mortgage ratethat increases.

If you’re having difficultiespaying your mortgage, by following these steps, you may be able to keep yourhome and/or protect your credit rating.

1. Negotiate with your lender. Dependingupon your particular situation, your lender may:

Wait totake legal action and agree to a repayment plan based upon your financialsituation, called forbearance. You’ll be required to provide information toyour lender to show you can meet the requirements of the new payment plan.
Waive thepayments, called debt forgiveness. (This rarely happens.)
Agree toa repayment plan that spreads out your missed payments over a longer term.
Allow youto refinance your mortgage, or change your loan terms, or extend theamortization period, called mortgage modification.
Allow youapply for another interest-free loan to pay the missed payments, called apartial claim. This is only available on certain government loans and if youmet the loan criteria.

2. Get government help. Contact aHUD-approved housing counseling agency for information on services and programsoffered by Government agencies. If your home was bought with a VeteransAdministration (VA) guaranteed loan, contact your nearest VA office forinformation.

3. Sell your home by yourself orthrough a real estate agent to pay off your mortgage loan to avoid foreclosure.You will need to discuss this with your lender to see if you qualify for thisoption. Consider selling your home as a short sale if the home is worth lessthan the amount you owe. You or your agent will need to talk with your lenderto see if they’ll agree to a short sale. While a short sale does affect yourcredit rating, it won’t be as bad as a foreclosure.

4. Deed your home back to yourlender, which will cancel the foreclosure. However, deeds-in-lieu offoreclosure will affect your credit the same as a foreclosure.

Above all else, beware of scams.If it sounds too good to be true, it probably is.

If youare feeling overwhelmed with your mortgage or you have questions about what'sthe best option for you, contact a trusted mortgage broker for assistance.

New Year’s Resolution: Home Improvement?

2012-01-03T09:00:00.000-05:00

Have you made your New Year’s resolutions? Most people thinkof resolutions in terms of self-improvement – losing weight, quitting smoking, andgetting more exercise. But why not make a resolution to improve your home in2012?

While the economic downturn has forced many people toreassess what’s necessary and what’s not, remodeling trends show that people are:

Investing in spaces that meet a need to accommodateschoolwork, computers or sports equipment.
Focusing on features that put an emphasis on family.
Looking for ways to make to their homes more energyefficient in order to save money.

Some remodeling trends for 2012 include:

Upgraded kitchens that offer convenience and energy savings –induction and gas stovetops, engineered stone and quartz bars, European spraypullout faucets, deep single bowl sinks, and French door refrigerators.
Mini-spa-like master bathrooms with large steam showers thatallow homeowners to relax and save money by conserving water. Other popularfeatures are dual rain shower heads, quartz and granite countertops, largebenches and handle grip bars in showers for the elderly, and high-efficiencytoilets and faucets for water savings.
Large family or great rooms that open up to the kitchen anddining room, creating a free-flowing space for optimal entertaining with familyand friends.
Lifestyle centers, instead of a formal office, for computerand electronic equipment use, providing an area for the kids to do homework oradults to pay bills.
Mud rooms that serve as drop zones for coats, hats, shoes, backpacksand other clutter. These rooms include cubbies, hooks, and closets for storage,and can be combined with the laundry room.
Updated flooring with radiant heat. Homeowners are switchingfrom carpet to hardwood, laminate, bamboo, stone, cork, tile or reclaimedmaterials. Radiant heating provides a practical and efficient way forhomeowners to heat their home.
Energy-efficient windows, appliances and lighting for costsavings.

Even if you can’t afford to spend a lot on updating yourhome, you can always add a coat of paint, or declutter and purge old items togive your home a fresher appearance.

If you are doing a major renovation project and need aremodeling loan, contact Grandview Lending. We’re here to work with you for allyour lending needs.

New Year’s Resolution: New Home in 2012?

2011-12-28T09:00:00.000-05:00

Thenew year is almost here. Is buying a new home on your list of resolutions for2012? If it is, then you need to make sure your financial situation is order.By following these tips, you can make your dream a reality.

1.Improve Your Credit Score

Inorder to determine whether you qualify for a mortgage, banks or lendingcompanies will check your credit score to determine how much of a risk you arein repaying the money they loan you. The higher your credit score, the moretrustworthy they’ll view you. A low score may keep you from getting a loan orthe best interest rate. Therefore, check your credit reports with Experian,Equifax and TransUnion to make sure the information contained on them iscorrect. Get any inaccurate information corrected. It can take 2 to 3 months toresolve any discrepancies. If your credit score is low, you’ll need to make anongoing effort to improve it by paying down debt, paying your bills on time,keeping your credit card balances low, and not opening new lines of credit.Over time by managing your credit responsibly, you can improve your score.

2.Determine What You Can Afford

Useone of the many online calculators to determine how much you can afford for ahome, or contact a reputable mortgage broker to discuss your financialsituation. Generally, you can afford a home that costs about 2-1/2 times yourgross annual salary. However, if you have other financial obligations, likecredit card debt, alimony or child support, you may need to settle for a lessexpensive home. Also, the size of your down payment will determine what you canafford, too.

3.Save Money for a Down Payment and Closing Costs

Generally,lenders want at least 20 percent of the home’s purchase price as a downpayment. If you can pay more, you may qualify for a larger loan. If you don’thave the money, you may still qualify for a low-down payment mortgage (aslittle as 3 percent of the home’s cost) through a variety of public and privatelenders. Plus you’ll need to pay for private mortgage insurance which addsabout 0.5 percent of the total loan amount to your mortgage payments for theyear. You also need to ensure you have enough money saved to pay for closingcosts and other fees for the appraisal, title search, inspection, and attorney.

4.Consider All Costs of Home Ownership

Besidesyour monthly house payment, make sure you can afford all the other costsassociated with home ownership, such as property taxes, homeowners’ insurance,homeowners’ association fees, utilities, maintenance and repairs, and homeimprovements.

5.Build Up Your Bank Account

Inaddition to saving money for the down payment, closing costs and other fees ofhome ownership, you should have at least 3 to 5 months’ worth of mortgagepayments saved. Your lender will want assurance that you’re a good loancandidate who’s not living from paycheck to paycheck.

Bytaking a good look at your financial situation and doing what you can to makechanges to improve your credit history and save money, you can improve yourchances of qualifying for a mortgage and buying a new home in 2012.

Is Your Home Ready for Winter?

2011-12-20T09:00:00.000-05:00

This week is the officialstart of the winter season. If you haven’t already done so, you should prepyour home for the cold weather. The following is a checklist of things to do, soyou don’t have to worry about your home this winter.

Have your furnaceinspected to make sure it’s working properly. Keep plenty of furnace filters onhand and change them monthly.
Bleed the valves onhot-water radiators.
Check your doors andwindows for leaks – caulking and weather-stripping as needed. Install stormwindows, replace any cracked windows and/or install plastic sheeting on theinsides of windows.
Clean out your guttersand downspouts.
Replace missing or wornroof shingles or tiles.
Add extra insulation inthe attic.
Insulate any water pipesalong exterior walls to reduce freezing. Disconnect garden hoses, drain andstore them inside the house. Turn off the water supply to exterior faucets anddrain the water in the line. Consider installing an insulated faucet cover.
Seal foundation cracksand entry points to keep small animals out. Close up crawlspace entrances. Sealthe areas around dryer vents, cable outlets and mail chutes.
Have your chimney or flueinspected. Make sure the fireplace damper opens and closes properly. Stock upon dry, seasoned wood for wood-burning stoves or fireplaces.
Install smoke and carbonmonoxide detectors. Install fresh batteries in existing detectors.
Trim tree branches thatare close to the house or power lines to prevent house damage or the powerlines from coming down in storms.
Stock up on rock salt or environmentallyfriendly products to melt ice on walkways. Keep sand available for traction foryour vehicles.
Tune-up snow blowers andhave snow shovels handy.
Prepare an emergencysupply kit that includes a three-day supply of food and water for each person,a battery-powered or hand-crank radio, flashlights and batteries, candles and matchesor lighter, battery back-up to protect your computer and electronic equipment,extra blankets and warm clothes, first-aid kit, and extra pet food, if you havea pet. Never use a generator or other gasoline, propane, natural gas, orcharcoal-burning devices inside the house.

By following these winterpreparation tips, you can safeguard your home and family against anyweather-related damage and save energy, too.

If you’re considering anew mortgage, contact a reputable mortgage broker to discuss your options anddetermine the best loan for your situation and future plans.

Safeguard Your Home for the Holidays

2011-12-13T09:00:00.000-05:00

The holidays can be a wonderful time of the year. While, theglowing candles, the crackling fires in the fireplaces, and the twinklingChristmas lights can make the season merry and bright, they can also increaseyour risk of a house fire. Every year, more than 400 Americans die due toholiday-related fires, and 1,000 are hospitalized with injuries.

However, by following these tips you can help protect your familywhile enjoying this festive season.

1. If you’re getting a real pine tree for your Christmas tree, avoidtrees with dry needles – making it more flammable. Before you place the tree inthe stand, make a fresh cut into the base of the tree to enable it to absorbwater better. Also, water your tree every day to prevent it from drying out.

2. If you’re using an artificial tree, make sure that it’sfire-resistant.

3. Place your tree in a sturdy stand so it doesn’t tip over. The treeshould be placed at least 3 feet away from fireplaces, radiators, electricaloutlets, portable space heaters and other heat sources. Do not block doorwaysor exits with the tree.

4. Check your Christmas lights for frayed or bare wires, crackedsockets, or loose connections – and replace as needed, to prevent a fire orshock hazard.

5. Don’t connect more than 3 miniature light strings together. Avoidoverloading your indoor and outdoor electrical outlets.

6. Check the rating on your extension cords and don’t plug in morethan the recommended wattage. Also, don’t use indoor extension cords outsidefor your holiday light display, since indoor cords are not waterproof and cancause a fire in wet weather.

7. Don’t run electrical cords under carpets or tack them up withmetal nails or staples.

8. Unplug all your holiday lights, both indoor and outdoor, everytime you are away from home and before you go to bed every night.

9. Don’t use real candles on your Christmas tree. Don’t leave candlesor menorahs burning unattended. Keep them away from anything flammable, such awindow treatments, decorations, and paper. Always extinguish all candleswhenever you leave home or go to bed.

10. Each year have your fireplace inspected and cleaned. Use a sturdyfireplace screen when burning a fire. Don’t burn wrapping paper or pine boughsin your fireplace, since embers can float out of the chimney and start a fireelsewhere.

11. Keep all fireplace mantel decorations, including stockings, awayfrom a burning fire.

12. Test your smoke alarms to ensure they’re in working order.

13. Develop a fire escape plan – identifying at least two exits forevery room, and practice your fire escape plan with family members.

By following these tips, you’ll ensure that you and your familywill celebrate many more holidays to come.

If you’re planning to purchase a new home or refinance during theholidays or in the New Year, contact Grandview Lending. We’ll be a happy towork with you for all your mortgage needs.

SIGTARP Cracks Down on Online Mortgage Modification Scams

2011-12-06T09:00:00.000-05:00

At the end ofNovember, the Office of the Special Inspector General for the Troubled AssetRelief Program (SIGTARP) shut down 125 online mortgage modification scamsadvertised on Google, Yahoo!, and Bing according to the National Mortgage News.The targeted scammers used deceptive Web banners and other online searchadvertisements, promising homeowners, that in exchange for a fee, they couldlower the homeowner’s mortgage through the Home Affordable Modification Program(HAMP), TARP’s housing program. Instead, these advertisers or agents werescamming struggling homeowners.

In the most commonscheme, homeowners paid an up-front fee for the companies’ assistance to lowertheir mortgage payments. The advertiser or agent would tell the distressedhomeowner to quit paying their mortgage and to stop all communications withtheir lender. Mortgage payments were then sent to the deceptive company and/or thehomeowner’s property deeds were transferred. The homeowners’ financialinformation was also released. In some cases, these fraudulent companiesclaimed to be affiliated with the federal government by using a name similar toan actual government agency or by placing a government seal on their website.

In cooperation withSIGTARP’s ongoing criminal investigation, Google and Microsoft, which createdBing and whose technology powers Yahoo! Search, suspended advertisingrelationships with the fraudulent companies identified by SIGTARP. In additionto stopping all future advertising with these companies, Microsoft also endedadvertising relationships with over 400 Internet advertisers and agents associatedwith these alleged online mortgage modification schemes. Additionally, Googleended advertising relationships with over 500 Internet advertisers and agents linkedwith 85 of these scams.

SIGTARP’s mission isto investigate and prosecute criminals who defraud homeowners in connectionwith HAMP. Plus, through education, SIGTARP wants homeowners to protectthemselves from becoming potential victims of mortgage fraud.

If you want to takeadvantage of a HAMP mortgage modification, you should work directly with yourlender, a reputable mortgage provider, or through HUD-approved housingcounselors. HAMP is a free program. You are not required to pay a fee. Youshould continue making your mortgage payments directly to your lender, and you shouldnever send your payments to another company. Also, be aware that if someonetells you to stop paying your mortgage or to stop all communications with yourlender, these are signs of a mortgage modification scam.

Is No-Cost Refinancing Really No Cost?

2011-11-29T09:00:00.000-05:00

Perhaps you’re one of theover 1 million homeowners who might benefit by refinancing at today’s lowermortgage rates. But like many Americans, you may not have the available cash topay for upfront fees. Maybe you’ve heard about “no-cost” refinancing, but you’renot really sure what it’s all about.

A no-cost home loan refinance(also called a no-fee refinance or no-cost mortgage refinance) is a loantransaction in which all your settlement or upfront costs are paid for by thelender or broker. These costs include application, title/escrow, credit check,appraisal, loan origination points, and other processing and underwriting fees.Normally, these out-of-pocket expenses amount to more than $1000. Sopotentially, you can “save” this money.

However, a no-cost refinanceis not a true no-cost loan. The bank or lender may take these fees, bundle themtogether and add them to your total loan amount – increasing how much you haveto pay back. Or, the bank or lender will increase your interest rate on a no-costrefinance. Usually, this rate increase is between a quarter and a half of apercentage point higher than if you had paid the fees upfront. Therefore,regardless of whether the lender increases your total loan amount or increasesyour interest rate, you’ll be paying for these closing costs over the life ofthe loan.

So, is a no-cost home loanrefinance the right choice for you? It may be if:

1. You don’t have the money readilyavailable to pay all the fees upfront.

2. You don’t want to spendyour available cash right now due to other factors.

3. You plan to move within afew years.

4. You refinance often totake advantage of lower interest rates.

However, if you plan to stayin your home and not refinance again for five or more years, a no-cost refinanceis probably not for you since you’ll likely pay more over time than what theoriginal upfront costs were in the first place.

You should also note thatno-cost refinances will vary by lender. Some lenders may pay for all costs,while others may still charge you for certain fees, such as title, escrow, andappraisal fees.

No-cost refinances areneither good nor bad. You just need to determine what your unique financial situationis, what the upfront fees are, and how the increased loan amount and/or interestrate will impact you. Do your research, crunch the numbers and talk to anexperienced mortgage professional to determine if a no-cost home loan refinanceis the right decision for you.

Full Disclosure Is the Way to Go

2011-11-23T09:00:00.000-05:00

So, you’re selling your house, doyou have to disclose to buyers that you’ve had problems with the windowsleaking? Or, that you live within a mile of railroad tracks? Or, that thesunroom added to the house by the previous homeowner was built without permits?Yes! And here’s why.

Granted, you want to show yourhome at its best, but you’re obligated to disclose these issues to potentialbuyers. However, if you’re the buyer, it’s your responsibility to read thedisclosure statements and be aware of past problems before you sign anycontracts.

So, what is a disclosure? A disclosure statement informs the buyer aboutthe home and the seller’s experiences with it that may negatively impact the home’svalue or enjoyment. Disclosure statements also protect the seller from a futurelawsuit.

The types of issues you have todisclose can be dependent upon the laws in your state, city, or even county.And, you may be liable for what you disclose, and don’t disclose, for up to tenyears after the home’s sale. Therefore, if you know that your windows leak, oryour neighbors’ son has a rock band that practices in garage, or you live neara highway or airport, it’s best to disclose it. Otherwise, if you don’t, youmay regret it later. Disclosure statements are valid, legal documents that canbe used in court.

Most disclosure statements are aseries of questions that the seller must complete about their home and experienceswith it. Additionally, if a potential buyer asks questions about the property,the seller is required to answer them, usually in written form.

Some common disclosures include:

Work done to the property – with orwithout permits
Pets
Termite problems
Property line disputes
Neighborhood issues, such asnearby construction and frequent traffic on nearby roads
Problems with electrical,plumbing, and HVAC systems or appliances
Liens on the property

Disclosure statements are usuallyprovided to the buyer once you’ve accepted their offer on the home. However, insome markets, you may need to provide disclosure statements to any prospectivebuyer. Be advised, the buyer has the right to back out of an offer based uponwhat they discover in the disclosure statements.

Either way, it’s best to fullydisclose any issues up front to avoid possible litigation later.

If you’re the home buyer,Grandview Lending is here to help you with your mortgage needs. Contact ustoday to discuss your particular situation.

Fixing the Housing Crisis Utmost in 2012 Voters’ Minds

2011-11-15T09:00:00.000-05:00

A recent survey by Move Inc.found that nearly 70% of Americans will base their voting decisions in the nextpresidential election on how the candidate plans to address the current housingcrisis.

According to Move Inc. chiefrevenue officer Errol Samuelson, “After four years of living in a housingdownturn, American voters clearly want answers and are looking to our electedleaders for solutions.”

Of the 1,000 people polledin the online real estate provider’s survey:

82% of Americans thinkhousing is a critical component to the U.S. economic recovery.
Nearly 70% of millennials,the next generation of homebuyers, say their vote in 2012 will be influenced bythe candidate’s ideas on fixing the housing industry.
About 75% of people think home-buyingconditions will be the same or worse a year from now.

Key areas that surveyparticipants think the next president should focus on include:

Helping distressedhomeowners avoid foreclosure.
Keeping interest rates low.
Making more affordablemortgage credit available.

However, among surveyparticipants, there was no clear indication that they want the government toget involved in trying to fix the housing crisis.

31% want the government’srole to stay the same.
Over 21% want the governmentto increase their involvement.
42% want less governmentinvolvement.

Of these respondents, 67% ofmillennials believe the government’s involvement in the housing crisis shouldbe reduced or remain the same. While over 56% of people between the ages of 35and 64 think the government should have less involvement.

Samuelson believes thesurvey shows that candidates who share the same concerns as Americans and makehousing a top priority will win the voters’ confidence in 2012.

Whateveryour thoughts are on the government’s role in the housing industry, Grandview Lending is here to take care of yourmortgage needs!

Even New Homes Are Not Perfect

2011-11-08T09:00:00.000-05:00

When you buy a newly build home, you expect it to beperfect. But according to a recent article in the Los Angeles Times, this is not always thecase. So as a new home buyer, it’s best to realize that “there is no such thingas a perfect home.”

Unfortunately, some home builders, these days, are cuttingcosts during the construction process in order to keep their homes affordableand profitable. One practice is to hire day laborers from the groups ofunemployed workers that gather around local convenience stores. More often thannot, these workers are not skilled plumbers, electricians, or carpenters.

As a result, these individuals’ workmanship can be veryshoddy. For example, exhaust fans may vent to nowhere; doors or windows don’tclose properly; the hot and cold water spigots are switched; electrical outletsdon’t work; insulation hasn’t been stapled to the studs within wall cavities;and sewer lines aren’t connected properly.

Other factors contributing to poor workmanship include:

Language barriers between day laborers and constructionsupervisors.
Shorter construction schedules, such as homes built in 60days compared to 120–200 days a littleover a decade ago.
Production supervisors overseeing multiple homes at onetime.
The substitution of less-expensive materials compared tothose in the past.

Therefore, if you’re looking to build and/or buy a newlybuilt home, here are some steps you can take to help make sure your dream homehas as few flaws as possible:

Look for a reputable builder by asking family, friends andco-workers for recommendations.
Have your new home inspected twice – once before the drywallis installed and again before the final walkthrough. If your builder says theydon’t do walkthroughs, you or your home inspection engineer should tour thehome, making a list of any issues to give to the builder. Or, better yet, takephotographs of issues to show the builder what needs to be fixed. These repairsshould be made before you go to closing and move in. Once you move in, anydefects you may find may be your responsibility to fix.
Don’t let a builder tell you he won’t fix something if it’snot a code violation. The code is just the minimum requirements needed.
Don’t take the builder’s word that repairs have been made.Re-inspect the home yourself or have it inspected by a home inspectionengineer.
Hire a real estate attorney if any serious issues, such as structural problems or mold, are notcorrected.

If you'reconsidering buying a newly built home, check with a professional mortgage broker to discusswhat the best mortgage option is for your particular financial situation. Grandview Lending is here to helpyou.

Residential Water Damage: Stay Out of Hot Water

2011-11-01T09:00:00.000-04:00

Seeing a little water on the floor may benothing. It’s when you have a lot of water on the floor or water stains on theceiling that you know you have a real problem. Water damage can lead to rottenfloorboards; damaged carpeting, rugs, furniture and possessions; and problemswith mold.

But did you know that your water heater andwashing machine are the most likely culprits of serious damage – even more thanMother Nature? Water heater and washing machine failures lead to one out ofevery 10 water-damage-related insurance claims.

Almost two thirds of all washing machine malfunctionsoccur due to internal component failure, machine leaks, and leaking or burstingsupply hoses. Malfunctioning supply hoses actually account for over half of allfailures. The average age for hose failure is 8.7 years since hoses are rarelyreplaced until they fail.

Most water heaters last 8 to 15 years. Waterheater failures are due to:

Sediment deposits corroding the tank andheater elements;
Wear and tear on the tank and pipes frommoving water;
The extreme temperature swings fromconstantly heating cold water.

Generally, waterheaters fail gradually, but not always. Signs of impeding failure include waterunder the heater, hissing or whistling valves, and/or chronic hot watershortages. Once these signs occur, prompt repair action is required.

Water leaks are themost common cause of residential property damage, even more so than fire. Thereforeto minimize any potential water damage in your home, you should take thefollowing steps:

Regularlycheck washing machine hoses for bulges, cracks, fraying and leaks around thehose ends. If a problem is found, replace the hose. For proactive maintenance,replace hoses every 3 to 5 years. Consider replacing hoses with stainlesssteel-braided or mesh hoses. Leave at least 4 inches of hose between the waterconnection and the back of the washing machine to ensure the hose doesn’t kink.Follow the manufacturer’s installation instructions carefully.
Don’tleave the washing machine running when you leave home.
Replaceyour water heater once every 10 years. Install a catch pan and drain. Regularlyinspect your water heater for leaks and signs of rust.
Shutoff the water to your home if you’re going to be away for several days. Makesure everyone in your family knows where your home’s water shutoff valve is andhow to operate it.
Considerinstalling a water leak detection system to alert you of any leaks or failures.Or install individual appliance systems to automatically shut off the watersupply in case of a leak.

If you do detect a leak or have water damage,immediately turn off the water supply. Remove any standing water and begindrying the area right away to prevent further damage from mold. Contact aplumber and a water extraction company if needed. Take photos or video of thedamage before repairs are done for insurance purposes. Keep any receipts fromthe clean up. And, contact your insurance company as soon as possible to see ifyour losses are covered. Most standard homeowners’ insurance policies usuallycover water damage repairs caused by water heater and washing machine failuredue to normal wear and tear.

Grandview Lending has your best interest inmind when it comes to your home. If you’re thinking of moving in the future, we’rehere to help answer your questions.

HARP Program Changes Designed to Help More Homeowners

2011-10-25T09:00:00.000-04:00

In an attempt to help “underwater”homeowners (those borrowers whose homes are worth less than the amountmortgaged) refinance, the Federal Housing Finance Agency (FHFA) announced planson Oct. 24 to overhaul the Home Affordable Refinance Program (HARP). Ideally,these changes will enable qualified homeowners, who are up-to-date on theirmortgage payments, to refinance their loans into a lower interest rate and/ormore stable mortgage product.

If these program changes work asplanned, it is believed that the number of possible foreclosures will bereduced, and homeowners will have extra money to spend on other items, thereby,boosting the economy. Additionally, homeowners will be able to refinance intoshorter-term mortgages, which means they’ll be able to pay off the balance owedquicker by reducing the term of their loan.

Changes to the program include:

Removing the previousloan-to-value limits, which were set at 125%.
Eliminating the need for a newproperty appraisal and loan underwriting.
Eliminating certain risk-basedfees for borrowers who refinance into shorter-term loans and reducing fees forother borrowers.
Extending the HARP refinancedeadline date to Dec. 31, 2013.

The eligibility criteria include:

The existing mortgage must havebeen sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
This program is available forloans with current loan-to-value ratios above 80%.
Borrowers must be current ontheir mortgage payments. You can have no late payments in the past six monthsand no more than one late payment in the past 12 months.
If your mortgage was previouslyrefinanced under HARP, you are not qualified to refinance under these programchanges.

The original HARP program wassupposed to have helped 4-5 million homeowners; however, it has only helped about894,000 borrowers. The FHFA estimates that by the end of 2013 HARP refinancescould help as many as one million underwater homeowners.

But critics say this will barelymake a dent when 11 million mortgages, or 23% of all home loans, areunderwater, according to CoreLogic, a housing research firm.

Also, due to HARP’s flat results duringits first three years, many people are skeptical about this new initiative.

“With negative equity at 26.8%and un- and under-employment at 16.5% in September, most foreclosures areoccurring because of a household’s inability to pay the mortgage or sell thehouse. So, modest decreases in a monthly mortgage payment won’t do much tosolve this fundamental underlying issue,” said Zillow Chief Economist Stan Humphries.

“But, for households that can paytheir mortgages this will reduce their mortgage payments, therefore helpingthem to repair their balance sheets by putting more money in their pocket. Inshort, I don’t think this will materially reduce the expected number ofdefaults, but it will be a strong economic stimulus that is relatively revenueneutral.”

The FHFA is expected to publishthe final changes to HARP in November. To take advantage of this program, youneed to determine if your mortgage is owned by Fannie Mae or Freddie Mac, andyou meet the eligibility requirements. If so, you should contact your existinglender or any other mortgage lender offering HARP refinances.

What to Do if Your Home Isn’t Selling

2011-10-18T09:00:00.000-04:00

If your home has been on thereal estate market for several months, and you haven’t gotten any offers, youmay be wondering what to do next.

Unfortunately, the market isloaded with lots of homes currently, and the economy is not helping either.Therefore, it’s important to step back, reassess, and perhaps put in a littleextra effort to increase your odds of getting your home sold.

Here are five tips you cantry to position your home to get it sold:

1. Consider taking your homeoff the market temporarily

If your home has been on themarket for 90 days or more, buyers may wonder why and assume that there’ssomething wrong with it. By taking your home off of the market for a fewmonths, when you do put it back on the market, your home will appear to be anew listing. Plus, by that time, there will be a new set of buyers looking forhomes.

2. Reconsider your listing price

If you’ve received lower offerson your home that you previously didn’t consider, now may be the time todetermine what the lowest price is that you’ll accept. Or, review the prices ofsimilar homes in your area and consider reducing your price to an amountslightly lower than the homes comparable to yours. It’s also important to berealistic when an offer does come in. In today’s market, it’s not wise to turndown a potential buyer with solid financing just because you’re expecting toget unrealistic offer.

3. Update your home’s appearance

Ask your real estate agent to getfeedback from other agents on your home and what improvements you can make toget your home sold. Quick and not-too-expensive cosmetic improvements, like afresh coat of paint in a neutral color, cleaning the carpets, removing clutterto make the rooms seem bigger, or adding landscaping, can make a big differencein the eyes of a potential buyer.

4. Ensure your home has a goodonline presence

According to surveys by theNational Association of REALTORS^®, 91% of homebuyers start theirhome search online. Make sure your agent has several photos of your home’s interior on their websitethat give potential buyers a good impression. You may also want to take outsome extra online or print ads to sell your home.

5. Consider getting a new listingagent

All agents are not the same;therefore, you need an agent that’s knowledgeable about the marketplace, has aproven track record in your area, and is willing to give your home extraattention to get it sold.

These are just a few tips to selling your home in this tougheconomy. Above all, remember you need to give potential buyers a good reasonfor buying your home with the best deal you can provide.

And when you’re ready to start looking for a new homeyourself, contact Grandview Lending for information on financing options.

4 Factors to Consider When Buying Foreclosed Properties

2011-10-11T09:00:00.000-04:00

Are you thinkingabout buying a foreclosed home (also called a Real Estate Owned – REO)? Whilethere is some potential for great deals, you need to educate yourself on thecomplexities of buying foreclosed properties. Some factors you should consider:

Will This Be YourPrimary Home or an Investment Property?

A foreclosed homemay require some fixing up, so you shouldn’t count on flipping the house for aprofit. Also since home prices in some areas may not bounce back for awhile,you need to make sure you can profitably rent the property.

How Solid Are YourFinances?

Foreclosed homescan come with surprise expenses. Therefore, you need to do your homework aboutthe market and the property. Areas with a surplus of foreclosures signal adeclining market with the risk of further property value declines. Also someproperties can have titles that are burdened with judgments, liens, late feesand other fines and attachments that you may have to pay off. So make sure you’re getting a clear titlethat has no issues and all liens have been released.

If you’reconsidering purchasing a property that is in less-than-mint condition, you needto realize that most banks sell REOs as is. Only in about 25% of cases willlenders fix some of the home’s issues before the sale closes. Therefore, youneed to budget accordingly if the home requires some work.

Get Pre-qualifiedfor a Mortgage

You should talkwith an experienced lender to help you determine a good estimate of the actualhome price. Also, your lender will help you figure out what you can afford fora monthly payment.

Hire ExpertsExperienced with Foreclosed Homes

It’s a good ideato make sure that you hire experts who are experienced with foreclosed homes toguide you through the process and any paperwork. This includes a reliable realestate agent and a trusted attorney. Never buy a foreclosed home by yourself.

Additionally,since many REOs may have been vacant for several months and can be in badshape, you need to tour the property with a contractor to help you spotproblems and determine how much it’s going to cost to fix them. Since the bankwill likely sell the home as-is, you need to be well-informed about any majorrepairs.

Is Now a Good Time to Buy a New Home?

2011-10-04T09:00:00.000-04:00

Last week ZillowMortgage Marketplace reported that the quoted mortgage rate on a 30-yearfixed-rate loan fell to 3.76%, another all-time low. Also, according to theNational Mortgage News, the recent low rates appear to finally be stimulating newmortgage applications, which went up to 9.3% during the week of Sept. 19-23.So, you may be thinking, “Is now a good time to buy a new home?” To help youanswer this question, you need to consider a few factors.

First, do you plan toown the property for a long time? When you buy a home, you expect to befinancially better off in the future than you are today. However, you need toown the property for at least 5 years or more in order to offset the mortgage transactioncosts, any repairs, and the monthly costs of ownership. Therefore, you need tofind a home that you love – one that fits most, if not all, of your current andfuture needs, if you’re planning to be long-term homeowner.

Other issues youshould consider include:

Do you have a steadyjob?

If you’re currently arenter, the property you’re looking at shouldn’t be considerably more expensiveto own compared to what you’re renting.

Is the home fairlypriced compared to similar home sales in the area?

Is the home in astable area?

Is the home in good shapewithout needing a lot of fix-up?

Will the payments beaffordable?

Have you done allyour homework to reduce your risk as much as possible?

If you’ve determinedthere’s a home that is the RIGHT property for you and that you’re going to ownit for a long time, you need to work with a reputable mortgage broker to lockin your loan. Grandview Lending can work with you to see if you qualify for amortgage loan and answer any questions you may have. So, is it a good time tobuy for you?

Lower Your Heating Bills: 7 Home Energy Efficiency Tips

2011-09-27T09:00:00.000-04:00

As the weather starts to getcooler, you’ll soon be turning on the heat in your home. Bymaking sure your home is energy efficient now, you’ll save money before winterheating bills start to arrive in your mailbox. Here are seven suggestions tomake your home more efficient before temperatures start to drop:

1.Schedule a home-energy audit

Ifyou’re not sure where your home’s biggest energy problems are located, aprofessional energy audit can help you figure out the most cost-effectivemeasures to improve your home’s comfort and efficiency. Check with your utilitycompany or the state’s energy department to determine if they offer home energyreviews. Sometimes you can get an energy audit for free or with a rebate. Or, theycan provide you with the names of reputable energy-audit firms. A goodinspector will perform a thermal-imaging scan to determine where heat isescaping and a blower-door test to see where air is coming in through cracks.

2. Install a programmablethermostat

While you could just loweryour thermostat whenever you’re gone or of a night while you’re asleep, it’seasy to forget to do this. Therefore, by installing a programmable thermostat,your heat will be adjusted automatically. A programmable thermostat can savethe average family about $180 a year.

3. Clean or replace furnacefilters

Your furnace will run moreefficiently if you clean or change the air filter each month during the heatingseason. Plus, you’ll save money. Mark your calendar so you don’t forget, orswitch to a permanent electrostatic filter which can trap about 88% of dust anddebris in your home. If members of you family suffer from allergies, a HEPAfilter can remove 99.97% of airborne particles.

4. Have your heating systemtuned up

Like a car, your heatingequipment runs better with periodic tune-ups. Check with your utility companyto see if they offer free annual inspections by qualified technicians. Alsosome furnace manufacturers and dealers may offer free or discounted tune-ups.By having your furnace cleaned, lubricated and properly adjusted, you can saveup to 5% on heating bills. If you need to have your furnace replaced, make sureyou take advantage of federal tax credits.

5.Turn down your water heater

By lowering the temperatureon your water heater to 120 degrees F (or lower), you can reduce your water heating costs by up to 10%. Plus, you reduce the risk of scalding accidents,especially in homes with children. If your water heater dial says “low,” “medium,”and “high,” instead of specific temperatures, you should set it somewherebetween low and medium.

6. Use caulking andweatherstripping

Leaks in your home can lowerenergy efficiency by 5% to 30% a year, according to the U.S. Department ofEnergy. Therefore, caulking and weatherstripping can save you money on yourheating bills. Places to look for leaks include: under doors, around windows,around chimneys, around can lighting fixtures, where pipes or wires exit yourhome, and along the foundation.

7. Install energy-efficient storm doors and windows

By installing a storm door,you can increase your home’s energy efficiency by 45%. Plus, these doors canlet in light and ventilate your home in warmer weather. Additionally, you can save energy byinstalling glass storm windows or do-it-yourself plastic-film storm windows tokeep out the cold.

By following these tips, you should save money on your homeheating bills. However, if your home energy audit reveals you need major homerenovations, like a new furnace, water heater, and/or windows and doors, youmay want to consider taking out a remodeling loan to finance these purchases.Grandview Lending can work with you to see if you qualify for a homeimprovement loan.

The Mortgage-Interest Deduction: Should It Be Reduced in Favor of Jobs?

2011-09-20T09:00:00.000-04:00

Last week the National Mortgage News ran an article, “How to Pay for the Obama Jobs Bill? Answer: Cutthe MID,” in which it talked about how the White House budget office isproposing to reduce the amount of mortgage interest that homeowners, makingmore than $250,000 a year, can deduct from their income taxes in order to helppay for the $450 billion American Jobs Act.

What this means, accordingto the article, is that if a married couple, who makes more than $250,000 ayear, paid $10,000 in mortgage interest and deducted $3,300 from their taxes in2010, beginning in 2013, they would only be able to deduct $2,800.

While talk about cutting oreliminating the mortgage-interest deduction has been discussed on Capitol Hillfor a number of years, it is still a popular tax break with homeowners. So,what exactly is the mortgage-interest deduction?

The mortgage-interestdeduction allows taxpayers who own a home, have a mortgage and itemizedeductions on their tax return to reduce their taxable income by the amount ofinterest paid on the loan. Mortgage interest includes interest paid on themortgage for a principal residence and a second home, home equity lines ofcredit, and construction loans. Interest cannot be deducted on more than twohomes. According to the IRS, “a home includes a house, condominium,cooperative, mobile home, house trailer, boat, or similar property that hassleeping, cooking and toilet facilities.”

You can deduct the intereston only the first $1 million of mortgage debt, regardless of whether it is yourprincipal or second home. You can also deduct the interest on up to $100,000 inhome-equity loans, even if the money isn’t used for home improvements.

The mortgage-interest deduction is offered as an incentiveto encourage home ownership, especially for people who continuously rent. Withthe availability of this tax deduction, you should consider whether purchasinga home is right for you. Contact Grandview Lending for more information on thevarious home loans available. Our mortgage calculator will help you determinehow much interest you’ll pay on your mortgage over the lifetime of your loan.

In Case of Loss: Do You Have Enough Home Insurance?

2011-09-13T09:00:00.000-04:00

This year in the U.S. we’ve seen many devastatingevents, such as wild fires, tornados, flooding, and a hurricane, which haveaffected many homeowners. In the aftermath of these events, it is even moredevastating for homeowners to find out that their property is underinsured.

As I’m sure most people are aware, thesevere economic downturn has resulted in declining real estate market values.However, the replacement cost to rebuild your home following a loss has notdeclined.

In many areas of the U.S., the cost torebuild a home now exceeds its market value. While some homeowners may thinktheir insurance coverage amounts should decrease due to lower home values, thisis not the case.

The difference between the marketvalue and the replacement cost of your home is:

Market value is the current price atwhich your house, the surrounding land, and all included structures, such asdetached garages, sheds, or swimming pools, can be bought or sold. This valuevaries based upon the supply and demand of real estate in your area. Somefactors that determine the value include: the condition of the home, location, thecondition of neighboring properties, the quality of the school district, andproperty taxes.
Replacement cost is the current price torebuild your house as it is now, in the same spot, using the same type andquality of materials, and at the same level of craftsmanship. The replacementcost doesn’t include the value of the land or any of the structures on theproperty. This price will vary depending upon the materials, labor, andequipment used to reconstruct the house. The replacement cost is not the home’spurchase price, the outstanding amount owed on the mortgage loan, or theproperty assessment figure used for taxes.

In a fourth quarter 2010 study of several metropolitanareas, large disparities between the market value and the replacement cost canbe seen. This is especially evident in the Sunbelt area where real estate valueshave taken a big hit.

Metropolitan Area	Sale Price	Reconstruction Cost	Percentage Difference
Cape Coral – Fort Myers, FL	$86,000	$222,800	159.1%
Phoenix – Mesa – Scottsdale, AZ	$132,300	$207,200	56.6%
Las Vegas – Paradise, NV	$134,200	$202,400	50.8%
Riverside – San Bernard, CA	$186,300	$258,800	38.9%

While some homeowners want to savemoney when buying insurance, you need to make sure you have adequate coveragein case of loss. Who wants to only replace part of a home because that’s allthe insurance coverage they have? Therefore, regardless of where you live, youshould insure your home for at least its full replacement value. Additionally, youshould keep track of current market conditions in your area, reviewing andadjusting your coverage amount periodically. For more information on yourcoverage, consult your insurance agent. If you’re purchasing a new home andneed mortgage information, contact your mortgage broker.

Home Buying Considerations for Couples Without Kids

2011-09-07T09:00:00.000-04:00

Are you and your spouse/significantother planning to purchase a new home? While there are several important stepsto consider to ensure you’re making the right decision about buying a home, onething you should take into account is whether you plan to have kids in thefuture.

Why does this matter? Everyone’sneeds are constantly changing. While a one- or two-bedroom condo may be plentyof space for you both now, if you’re thinking of having children in the future,then your condo may become too small once your first child is born.Additionally, if you want to recoup your investment, it’s best to plan onstaying in your home for at least five years or more.

So, if you don’t want toexperience buyer’s remorse, you should consider the following questions to helpyou determine what kind of home is right for both of you and your future needs.

1. Do we plan on having children?If you want to live in your new home for the long-term, then you need to choosea house that will give you plenty of room for a growing family. You shouldconsider:

How many bedrooms will you need?
How big are the rooms?
Does the home have a laundry room?
Does the home have a back yard?

2. Where is the home located? Whenyou’re in your ‘20s, a home near restaurants and nightlife may be ideal, butonce you have a family, this may not be as appealing. You should consider:

The quality of the neighborhood –Is it economically safe (i.e., low crime rates and well maintained homes andyards)? You want to sustain the value of your home in case you do want to sellin the future.
Are there young families in theneighborhood?
Is it close to shopping andparks?

3. Within what school district isthe home located? A good school district not only determines the type of educationyour future children will receive, but it also affects home values. Plus, ifyou do eventually plan to sell your home, a good school district may be of greatinterest to potential home buyers.

4. Where do you both work? Notonly do you need to consider your current jobs, but you should keep in mind anyfuture jobs. A home that is centrally located, or near main roads or publictransportation, will reduce commuting times. Also, is the home located nearshopping and doctors’ offices?

By keeping these considerationsin mind, you can make a smart decision in buying a new home for both yourpresent and future needs. If you have other questions about buying a new home,contact a reputable mortgage broker. They’ll be happy to review your situationwith you.

What is a Prepayment Penalty?

2011-08-31T06:00:00.000-04:00

Perhaps you’re selling your home or thinking of refinancing now that the interest rates are so low, do you know if your current mortgage has a prepayment penalty clause?

While prepayment penalties are not as common as they once were, depending upon when you took out your current mortgage, your bank or mortgage company may have given you this option when you completed your paperwork.

A prepayment penalty is a provision in your mortgage that states you will pay a fee, or penalty, to the lender in the event that you pay off the loan, or a portion of it, before a specified time period (for example, less than 5 years) or the end of the loan term.

Typically, the penalty is a percentage of the outstanding principal balance at the time of prepayment. For example, if the penalty is 3% of the balance, and you owe $100,000 at the time of prepayment, the fee would be $3,000. However, another prepayment formula uses a declining percentage that may call for a 3% penalty during the first year, a 2% penalty during the second year, and a 1% penalty during the third year. This calculation is based upon the amount of interest that would be paid on the balance during a specific time period – for example, 6 months of interest on 80% of the balance at the time of prepayment. In this scenario, if you have a $100,000 loan that has a 10% interest rate that you want to prepay, the penalty is determined as:

80% of the balance equals $80,000.
One year of interest at 10% is $8,000.
$8,000 divided by 2 (to get 6 months of interest) equals $4,000.

Reasons you may prepay your mortgage include when you:

Refinance your mortgage for a lower interest rate, and your current loan is paid in full, so the new mortgage loan can be issued.
Make a payment against the mortgage’s principal.
Sell your house and the loan is paid off.

Generally, most lenders only require you to pay a prepayment fee if you pay back the loan early, such as during the first 3 to 5 years of taking out the loan, and they don’t require a fee when you sell your home. A prepayment due to refinancing is considered a “soft” penalty.

A “hard” penalty is when you have to pay a fee regardless of the reason for paying off the loan. However, with most loans, you can make partial prepayments of up to 20% of the loan balance within any one year without paying a fee.

Prepayment penalties are not necessarily a bad thing. In exchange for accepting the prepayment penalty clause in your mortgage, you may receive a lower interest rate and/or lower closing costs. While your lender has the assurance that you’ll keep the loan for a specific time period or you’ll pay the fee.

To determine if your current mortgage has a prepayment penalty, you should carefully review your mortgage paperwork. You should look for the words “prepayment penalty terms” or a “prepayment penalty rider.”

If you have any questions regarding an existing prepayment penalty clause or the terms on your new mortgage, contact your mortgage broker for answers, so you can make an informed decision.