Why would you consider refinancing if your mortgage is only two or three years old and the rate is not considerably higher than what is currently available on new loans? Because you may be able to eliminate the mortgage insurance and have significant monthly savings.
Many homes have seen their values rise in the past few years. The current loan-to-value ratio may be low enough to no longer require mortgage insurance. In some cases, a homeowner might actually pay a little higher rate than they currently have but lower their monthly payment dramatically because the mortgage insurance isn’t required.
A rough rule of thumb is that mortgage insurance is not needed on loans at or less than 80% of value. There could be programs available that would allow a higher LTV than 80%.
Careful consideration should also be given to the fees required to refinance. Lenders differ in not only the rates they charge but also the fees associated with the loans and the process. If you’d like a recommendation of a trusted mortgage professional, we’d be happy to make a recommendation.
Low inventories resulting in multiple offers are contributing to what experienced agents are calling the most challenging market they’ve ever worked. While buyers with resources may find the market difficult, purchasers with minimum cash and credit are struggling to find and get into a home.
First-time buyers feel the impetus to purchase because they’re renting and are concerned about being priced out of the market with rapidly appreciating prices and rising interest rates.
Sellers may not feel the same urgency because they already own a home. While they might find it appealing to change homes, they may not feel a pressing motivation causing them to act.
In some cases, sellers are so attached to their low interest rate mortgage that instead of selling, they’re keeping the home for a rental property. This may be a good investment for people with additional cash resources for the down payment and closing costs on the replacement property.
Why now is a good time to sell:
- The economy is strong.
- The majority of home sales occur in the months of May through September.
- Many buyers find it preferable to move in the summer because their children are out of school and they can avoid the winter weather.
- Mortgage rates are still very low but are starting to rise.
- Current low inventories in most markets result in higher prices and less competition.
Contact your real estate professional to evaluate the opportunities of making a move.
Preserve the memories you’re making by taking photographs of your home now. The pictures will remind you of the role your home played with your family and life.
Reminiscing is easier when scrolling through pictures to remind you of people and times. One of the least heard regrets is that we should have taken more pictures.
Shots to consider:
- The front of the home from across the street
- Times when your yard and plants looked exceptional
- Holiday decorations
- Special occasions in the homes like birthdays, anniversaries, graduations, etc.
- Major purchases for the home
- Times when the home looked the best and the worst
- Family, friends and pets in the home
- Your children’s height marks on a door frame
- The view from a favorite window
From an organizational standpoint, put the pictures in a folder with your address as the name. Even if you don’t take time to name each picture, you’ll have the file date to identify when it was taken. Since the cost of film and processing has disappeared, there is little reason not to chronicle your life in pictures.
Ah… Memorial Day. Used to be a big thing. It still is as we remember our veteran (of which Dave is one), but the whole three-days off thing seems to lose its shine if one is self-employed. Every weekend COULD be a three-day off thing, but is almost never is. Days off when you’re not on a clock are when you take them and even then you always feel you should be “doing something.”
And so this past holiday Dave wanted me to get one “day off” and so we chose Sunday. That way we could work Saturday and then have Monday to “clean up” before starting the week on Tuesday. We decided to hike the Winner Creek Trail in Girdwood. It was wonderful hiking the trail this past February since the ReMax/Dynamic awards banquet was at the Alyeska Hotel. On that day we stayed out a bit too long as it began to get dark as we were still a mile from the hotel, and then had to get dressed and all that stuff.
This walk was more relaxing even though Dave said it was “ likie enjoying nature in fast forward.”
I think he meant we were walking a bit fast and he was enjoying his “dog walking” pace. The Hand Tram that crosses the creek was fun. I got my Crossfit workout for Sunday by pulling people across in that basket. It was a crystal-clear day and the creek was high. It’s crossed by a cable driven box pulled by folks on either side. When Dave and I got to the road on the other side we met a man with a curl of rope in a wheel barrel. He wasn’t all that happy. It turns out they were to change out the cable and they cut it …50 feet too short! Yikes! He told us there was a wire cable woven into the rope and so we felt better going back over after seeing the Duct Tape!!!!
On the way home we stopped at Forget-Me-Not Nursery to pick up some plants for the garden.
If a seller was looking at two offers for exactly the same price on their home, there would still be things that could make one standout more than the other. If there happens to be more than two offers, things can really get sticky for a buyer. For that reason, it is good to craft the most attractive offer possible because even if you don’t have competition now, another offer could come in during negotiations and derail all your efforts to that point.
Anything that can give the seller the peace of mind that one contract will close on time and as agreed will make them more comfortable in accepting one offer over another. Buyers can consider putting up larger than customary amounts of earnest money and limiting the contingencies to only the most essential items.
The closing costs could be more expensive to the seller based on the type of mortgage a buyer is obtaining. One buyer may be asking the seller to pay part or all of their acquisition costs and the other buyer is paying their own costs.
The borrower who has a signed, preapproval letter will appear to have a greater certainty to closing than a buyer who only says they have talked to a loan officer. Some lenders’ letters are considered “gold” and others may not be worth the paper they’re written on. The seller will depend on their listing agent to advise them.
In most cases, the seller will be taking all or part of the cash they receive from the sale of their home and buying another one. If they have to put a contingency clause in the contract based on their current home selling, it weakens their position. Conversely, it will strengthen a buyer’s position if they don’t have to make their offer contingent upon selling their current home.
Even shortening the inspection periods and offering to close early or possible lease the home back to the seller for a short time can be valuable negotiating factors.
Finally, don’t overlook the value of a personal hand-written letter that tells the seller why you want their home. An emotional connection has been known to make a difference for one set of buyers getting the home.
When the 75 year old man who had been widowed four times was asked why he was getting married again, he said “for the little bit that they eat, I wouldn’t want to be without one.”
In a torrential rainfall, you wouldn’t want to be without an umbrella. It is also understandable that when purchasing or selling a home, more and more people want an agent involved.
NAR’s Homebuyers and Sellers Profile states the trend in owners trying to sell their home themselves has declined over the past ten years from 14% in 2003 to only 9% in 2014. Similarly, the number of buyers purchasing directly through an owner has decreased from 2001 to 2014 from 15% to 5%.
It is natural to think that a seller wants to get the highest price for their property while the buyer wants to pay the least possible. Negotiations may be the most valuable service provided by an agent because of the clear conflicts of interest such as the price, terms and condition.
Other areas of contention that could affect a party without an agent:
- The real estate agent who represents the other party
- The attorney who represents only one party
- Home and pest inspectors regarding condition
- The buyer’s lender regarding terms
- The lender’s appraiser regarding value
- The title company in an effort to satisfy challenges to clear title
- Municipal authorities to mitigate code violations
Even when there are two licensed agents involved, there could be a question of representation. This is a discussion that buyers should have with a real estate professional before looking at houses.
Imagine that after checking www.SSA.gov to see what you can expect when you retire and estimated what your minimum required distributions from your retirement accounts will be, you’ve discovered that you’re not going to have enough retirement income to cover your living expenses.
Ideally, it would be perfect if the extra money you need would just come to your mailbox each month with the same certainty as your social security or retirement income.
Rental homes are a popular choice for passive income because they are an investment that most people understand based on their experience owning a home. They’re easy to manage and the rents should keep pace with inflation.
Mortgage loans for investors are available to investors with good credit and at least 20% down payments. While 30 year terms are the most common, some investors wanting to have the home paid for by retirement may choose a 15 or 20 year term.
A tried and true strategy is to choose average or slightly below average priced homes in predominantly owner-occupied neighborhoods. This will appeal to more prospective tenants wanting to live in good communities and should provide a higher level of revenue.
When an owner has a good property with a good tenant, the income is as predictable and convenient as going to the mailbox each month. To learn more about rental homes, contact your real estate professional.