Are you thinking about buying a new house or condo? If so, you’ve likely given some thought to your mortgage and as to how you can pay as little as possible in order to own your new home.
Below we’ll share four easy steps that you can take to ensure you start out with an affordable monthly mortgage payment.
Make A Large Down Payment On Your Home
The easiest way to reduce your monthly payment is to invest as much as possible in your down payment. The less you have to borrow, the less you’ll be required to pay back.
If you can put a sizeable amount down on your home you’ll find that your monthly payments are going to be very manageable. You’ll also save a lot of money in interest.
Maintain A High Credit Score
When a lender assesses your financial history they’ll take an in-depth look at your credit score in order to determine how much risk you present to them. If you’ve kept a clean credit rating and have a high score, it’s likely that you will qualify for a lower interest rate than someone with a lower credit score – even if you both have the same monthly income.
Buy A Smaller, More Efficient Home
When you’ve made your short list of homes and you’re scheduling your viewings, ask yourself – do you need a home this big, or this expensive? If you can do with a smaller, more efficient home you can reduce the amount of mortgage financing that you require and this will in turn reduce the amount that you need to pay each month.
Consider A Longer Mortgage Term
Finally, if you need to reduce your monthly payment at any cost you can stretch out your mortgage repayment period by a few years. Note that while this can reduce your payment amount it will actually increase the total amount that you end up paying back as you’ll pay more in interest.
While the above are general tips for reducing your mortgage payment, it’s likely that there are other strategies that are unique to your financial situation. Contact your local mortgage professional at your convenience and they’ll be able to share insights that are relevant to your income, your credit and the price range you’re looking to buy into.
According to the S&P Case-Shiller 20 City Home Price Index, Home prices rose by 0.20 percent in August. Three of the 20 cities tracked saw home prices drop, while Detroit, Michigan posted the highest price growth. The seasonally adjusted growth rate for cities tracked declined by 0.10 percent as compared to a decline of 0.10 percent in July.
Detroit led monthly home price growth with a gain of 0.80 percent. Dallas, Denver, Colorado and Las Vegas, Nevada posted gains of 9.50 percent as compared to July. Cities posting declines in home price growth included San Francisco at -0.40 percent, Charlotte, North Carolina and San Diego, California at -0.10 percent.
Home prices increased by a seasonally-adjusted year-over-year rate of 5.60 percent in August, which was the lowest reading since November 2012. Year-over-year home prices grew by 6.70 percent in July. August home prices were 16 percent lower than their 2006 peak.
The Case-Shiller National Home Price Index posted a year-over-growth rate of 5.10 percent. This index covers all nine U.S. census regions.
Analysts note that slower growth in home prices will likely attract more buyers, but is a sign of overall decline in demand for homes. August home prices were 16 percent lower than their 2006 peak. As the jobs market continues to improve and if mortgage rates remain low, more buyers are expected to enter the housing market.
FOMC Statement: QE Ends, Labor Market Forecast Brighter
In its customary post-meeting statement, The Federal Open Market Committee (FOMC) of the Federal Reserve announced that it voted to reduce asset purchases under its current quantitative easing (QE) program to zero. The committee’s decision concluded 37 consecutive monthly purchases of Treasury bonds and mortgage-backed securities.
FOMC cited “substantial improvement” in the outlook for the labor market since the inception of QE purchases, and also noted “sufficient underlying strength in the broader economy” as the basis for the committee’s decision. The demise of QE was no surprise as FOMC has consistently tapered asset purchases each month along with its advisory that it planned to end asset purchases under the current QE program this year.
The FOMC characterized the pace of economic improvement as “moderate,” but also said that “labor market conditions improved somewhat further with solid job gains and a lower unemployment rate.” Along with the stronger outlook for jobs, the Fed noted that “underutilization of labor resources is gradually diminishing.”
The committee held to its position that it would not increase the target federal funds rate for a “considerable time” after the quantitative easing program ended. Analysts following the Fed estimate that no changes to the federal funds rate will be made until June 2015 or later.
Are you selling your house or condo? Once you place your home up for sale you’ll start to receive interest from prospective buyers, many of whom you’ll meet in person and invite in to take a look around. In order to ensure your sale goes smoothly you’ll want to avoid making any slip-ups that can spook the buyer and cause them to drop their interest in your listing.
Let’s take a quick look at three ways that you can scare buyers off and how to avoid finding yourself in these circumstances.
Pricing Your Home Too High
One of the biggest mistakes made by home sellers is setting the initial listing price too high. If your price is significantly higher than those of similar homes in the local area, you’ll find that buyers will be hesitant to make an offer as they are worried about a lengthy negotiation process.
Instead, aim to have your home priced fairly from day one and you’ll find that you receive far more interest.
Being Pushy Or Overbearing During The Sale
Selling a home will require a lot of personal interaction between you and the home buyer, and it’s important to make them feel welcome and to build a rapport with them. The last thing you’ll want to do is to come off as pushy or overbearing, which can sour your negotiations and cause the buyer to decide they may want to work with someone a little more friendly.
Neglecting Important Maintenance Or Renovations
Finally, if you’ve neglected any sort of major home maintenance or if your home has significant damage in an area you may end up scaring the buyer off if these issues are uncovered during a home inspection. As part of the final due diligence process, your buyer will have the home inspected at least once from top to bottom looking for any possible issues that they may inherit after buying the home.
If the inspection was to uncover a structural problem like a crack in the foundation, at best you can expect that the buyer will expect a significant discount on the home and at worst they’ll walk away from the deal.
If you’re serious about selling your home, one of the best ways to ensure that your relations with buyers go well is to have a professional real estate agent represent you during the selling process. When you’re ready to sell your home, contact your local real estate agent to arrange consultation where they can explain how home selling works and what you can expect.
Are you thinking about buying a second home to spend some time in when you’re on vacation? Whether you’re picking up a small house near the beach or you’re looking at a ski-in/ski-out condo at your favorite ski resort, if you’re only going to be in the home for short periods each year you may want to consider renting the property out the rest of the time to generate some additional income.
In this post we’ll share a few tips for getting your property ready to rent to short-term visitors and how to get things started.
Preparing Your Home For Use As A Rental
Before you list your vacation property up for rent you’ll need to get it ready for your first tenants. Spend some time walking through the home to determine what’s missing and what might need to be upgraded.
Do you have a few spare sets of sheets and towels? Are all of the kitchen appliances in top condition? If you’re going to be supplying soap, shampoo and other toiletries, are you fully stocked?
Remember – your goal should be to impress each and every client to ensure they leave a positive review and come back again in the future.
Hiring Housekeeping And Property Management Services
Since you likely don’t live in the area around your vacation home, you’ll want to contract out the cleaning and management to local vendors who specialize in managing vacation properties. It should be relatively easy to find these companies with a quick web search, but be sure to ask for recent references so that you can rest easy knowing your home is in good hands.
Listing Your Rental On Popular Websites
Once your home is prepared and you have your team lined up, it’s time to list your property on websites such as VRBO, HomeAway and AirBnB. Browse through other local listings to see how your competition markets themselves and to get an idea of how much you should be charging on a nightly or weekly basis. Also, remember you’ll need to set up a PayPal account or figure out another way for your clients to pay for their stay.
Don’t forget that your local real estate agent will have some additional strategies on how to turn a second home into one that generates a positive return on your investment. Contact a real estate agent today to discuss investment properties and they’ll be happy to help.
Last week’s economic news included a few developments connected with housing and mortgage industries. While no economic reports were released on Monday, the rest of the week provided good news for existing home sales, home prices and mortgage rates.
The National Association of REALTORS® reported that existing home sales in September exceeded expectations and the prior month’s reading with a seasonally adjusted annual rate of 5.17 million sales.
Three of four U.S. regions posted higher sales of previously owned homes with only the Midwest region reporting a decline in existing home sales. Analysts said that consistent job growth and improved access to mortgage loans are two keys to improving U.S. housing markets.
FHFA, the agency that oversees Fannie Mae and Freddie Mac reported that home prices for properties associated with Fannie Mae and Freddie Mac mortgages rose by 0.50 percent in August.
In a separate development, FHFA Director Mel Watt said that the agency is reviewing policies that could lessen lender concerns over requests to repurchase Fannie and Freddie loans due to early defaults or other deficiencies. This was seen as a possible solution to current strict mortgage approval requirements that are limiting access to home loans by first-time and moderate income buyers.
Mortgage Rates Fall, Weekly Jobless Claims Rise
After falling below four percent the prior week, last week’s mortgage rates continued to decrease. The average rate for a 30-year fixed rate mortgage fell by five basis points to 3.92 percent; 15-year fixed rate mortgages had an average rate of 3.08 percent, a decrease of 10 basis points. The average rate for a 5/1 adjustable rate mortgage was one basis point below the prior week’s reading at 2.91 percent.
Average discount points were unchanged at 0.50 percent. Lower mortgage rates help with making home loans more affordable, but analysts again noted the importance of improved access to mortgage loans for would-be home buyers.
Weekly jobless claims were higher at 283,000 new claims filed as compared to projections of 285,000 and the prior week’s reading of 266,000 new claims filed. While higher than in recent weeks, new jobless claims have remained below 300,000 for six weeks. The Labor department reported that new claims over the past month fell by 3000 to 281,000 new claims. This reading was the lowest since May 2000. Due to week-to-week volatility, financial analysts and economists view the month-to-month readings as a more consistent data source.
New Home Sales Hit Six-Year High in September
Sales of new homes in September ended the week on an upbeat note and exceeded expectations; they reached a six-year high in spite of downward adjustments to sales figures reported earlier. September’s reading was 467,000 new homes sold on an annual basis as compared to expectations of 455,000 new homes sold and August’s reading of 466,000 new homes sold.
Next week’s scheduled economic news includes pending home sales, the Case-Schiller home price index reports, the Federal Open Market Committee (FOMC) post-meeting statement and reports on consumer sentiment and consumer confidence. The Freddie Mac PMMS and Weekly Jobless Claims reports will be released as usual on Thursday.