All those "record-low" mortgage rates have you watering at the mouth to buy a home or refinance your current one? Mortgage lenders adjust their rates based on perceptions of risk, so unless you can show you're a low-risk borrower, you are unlikely to qualify for a rate that matches those seen in all the advertisements and headlines.
Consumers who want to try for the lowest rates available need to consider these basic factors:
Credit Score: The ideal borrower has a FICO score of 740 or higher. That puts you in the best place for pricing. According to MyFICO.com, borrowers with scores of 760 to 850 could qualify for an annual percentage rate of approximately 3.95 percent on a $500,000 30-year fixed-rate mortgage, while those with scores of 620 to 639 qualify for 5.53 percent.
Points: The lowest rates usually are decreased by paying a fee called a point, or 1 percent of the loan amount. You need to buy points in order to get the best rates at many banks. In Freddie Mac's recent weekly survey on mortgage rates, points have averaged 0.7 percent on loans in the last year. Points might make sense depending on your financial situation and how long you expect to stay in a home. So ask for a zero point quote, too, and compare.
Down Payment: Borrowers who put down at least 25 percent are more likely to obtain "attractive pricing" at most banks. Lenders offer different breaks on rates if equity is higher, so you should ask what is available.
Loan Length: A lot depends on how long you plan to live in a home. If you're likely to move in a few years, an adjustable-rate loan with a low interest rate fixed for, say, three to five years, and adjusted afterward, might work best. Also, rates on 15-year fixed-rate loans are lower than those on the 30-year — 0.77 percentage points, on average, last year.
Property Type: If you're buying a duplex or a four-unit building, your rate will almost certainly be higher. Condominiums may also have a rate premium, especially if they are newer or your down payment is below 25 percent. Lenders charge more if you are not planning to live in the home. Commercial properties like apartment buildings have the highest rates, as they are considered riskier.
Borrowers may also be able to reduce their mortgage rate when they enter into a "lock-in" agreement with a lender. Lenders typically offer a lower rate for a shorter lock period.
Lenders typically agree not to change an offered interest rate for 60 days, but borrowers confident of a quick closing may be willing to accept a 45-day rate guarantee, or even a 30-day lock, in exchange for a small discount, because the transaction's speed helps the lender reduce its risk.
Borrowers must make sure, too, that they consider the entire cost of a home, looking carefully at monthly payment calculations. About a third of homeownership costs are in addition to the mortgage — among them property taxes, insurance, maintenance and repairs.
Thinking of getting a pet in the new year? Here are three things to consider when budgeting for a pet.
1. Routine Vet Care
2. Emergency Care
3. Optional Costs
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The long-awaited housing recovery is beginning to blossom, according to industry experts taking a look at recent existing-home sales.
Paul Dales, chief economist at Capital Economics, says "it is clear that a housing recovery is now well underway."
Lawrence Yun, chief economist for the National Association of Realtors (NAR), concurs with Dales' assessment, saying "The pattern of home sales in recent months demonstrates a market in recovery."
The evidence: home sales have been on the rise for the past three months, posting a 5 percent increase in December.
In addition to the 5 percent increase in December, NAR reported a 1.7 percent annual increase in existing-home sales in 2011, a total of 4.26 million homes for the year.
Housing inventory is on the decline and fell to its lowest level since March 2005 last month, according to NAR. Approximately 2.3 million homes are available for sale currently.
"The inventory supply suggests many markets will continue to see prices stabilize or grow moderately in the near future," Yun said.
However, listed inventory is only part of the equation, and according to CoreLogic's latest numbers, shadow inventory stands at about 1.6 million.
Regardless, Dales believes sales will rise this year. "Housing still won't contribute much to GDP growth over the next few years, but at least it will no longer subtract from it," Dales says.
If you're a homeowner, you most certainly have a homeowner insurance policy to cover your home. Not only is homeowner insurance a necessity, lending regulations require every homeowner with a mortgage to have some form of homeowner insurance coverage. It is a vital investment you need to make in order to protect your home and everything in it against accidents and hazards like fire, storm, flood, and others. Any accidents which occur in the house or on your property should also be covered, including medical reimbursements in cases of accidents and injuries.
You may have homeowner's insurance, however, the question is, is it the right coverage? Home owners insurance differs depending on the type of coverage included in your policy. Different areas may require different types of coverage. Areas most commonly affected with natural disasters like flood, hurricane, and storms, also have special coverage against these types of natural hazards.
A good example is the homeowners insurance policy in some states where a special section called the wind policy is included. This is especially provided for homes in areas which are often experience hurricanes. This will provide home owners the necessary coverage against a very common hazard in those areas.
Upon signing your homeowners insurance policy, you need to know what is included and not included in the coverage. This will help you decide whether to provide additional homeowners insurance for other specific coverages. Some homeowners insurance policies may not cover your home against earthquake, nuclear exposure, and tsunami. If you feel you live in an area where nuclear exposure is a known hazard or if you are along the ring of fire and may want to provide additional coverage against earthquake, try to talk about this with your insurance provider and get possible coverage for these types of hazards.
Your homeowner insurance may also provide coverage for the belongings you have within your home. However, if you have expensive and valuable items within your home which the standard home insurance policy may not completely cover, you might opt to add another type of insurance — content coverage.
Make sure you have the right homeowners insurance coverage. If you are not sure about it, always seek the help and assistance of your insurance provider.
Slightly over half of all homeowners say their homes are worth more today than they were when they bought them, according to a new national survey conducted just before Christmas.
Most homeowners are confident they know what their home is worth, and a greater number than ever, some 29 percent, believe that they have lost value since they bought it.
An earlier Rasmussen national telephone survey conducted in early November found that just 12 percent of U.S. homeowners now expect the value of their home to go up in 2012.
The latest Rasmussen Reports national telephone survey also found that homeowners are growing increasingly pessimistic about their home equity position. The survey found that just 44 percent of homeowners believe their home is worth more than the amount they still owe on their mortgage, a decrease from 50 percent of owners in April who believed their home is worth more than the mortgage.
The survey of 690 U.S. Homeowners was conducted December 19th & 20th, 2011 by Rasmussen Reports. The margin of sampling error is +/- 3 percentage points with a 95% level of confidence.
Are you a homeowner? If so, do you think your home is worth more than when you bought it? We'd love to hear how you feel about your home's value. Leave us a comment by clicking the comment link below. Your email address will never be shared on this site.
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