You’ve probably heard it many times, but let me say it again: buying your first home is probably one of the biggest decisions you’d ever have to make in life. If this is one of your goals for 2010, let me help you get on your way with a few tips that have been tried and tested.
Examine your lifestyle. Your home is going to be a central part of your life. While it is inanimate, it is definitely going to affect how you live your life. Its location, especially in relation to your place of work, is going to be important. The floor plan, the size, the layout – all of these should fit your lifestyle. From the outset, determine what it is exactly that you want: where should the house be located? How big should it be? How many rooms? What rooms do you need? And so on.
Know just how much you can afford on the house. Knowing what you want and need is one thing. Having to pay for all those needs and wants is another story altogether. Once you have decided on your first house and every other physical detail, you have to know what you can and cannot afford. You have to set the limits before actually going out and looking.
Seek professional assistance. It’s your first time. You want to do it all by yourself. The best way to go, in my opinion, is to seek expert advice, especially in legal aspects. It’s better to go about it the right way than to regret things later on.
Getting a mortgage used to be an easy thing; at least during the height of the real estate boom. We know that all good things must come to an end, however, and currently, getting a mortgage can be as difficult as going through the eye of a needle. For those who are looking to buy a home in these hard times, your best bet would be to get a preapproved mortgage, even if you have not decided on what to buy yet. But how do you get this? Is this even possible?
The good news is that yes, getting preapproved is quite possible despite the difficult times. Here are some tips on how to get preapproved for a mortgage.
Do it early!
If you plan on buying a house next year, shop around for mortgage lenders NOW. The chances are that you will not get a preapproved mortgage on your first try. Probably not even on your second, third, or fourth try. As such you will have enough time and you do not have to go through additional stress because of the time factor.
Get your financial records in order.
No matter how you look at it, you are going to be asked to share your financial information. Get your act together – proof of income, credit, assets, and everything else that will help you prove that you are capable of paying the mortgage.
Know this: preapproval does not obligate you to borrow from the lender.
This is the beauty of the arrangement. You can get preapproval but you can back out in case you decide not to borrow money. You are not tied down. Remember that.
Hard times are upon most of us yet we cannot deny the fact that there are still people who are in the market for a house. There are still those who are selling and buying real estate. If you are looking for a house to buy, here are some great tips which can help you make the most out of the current situation.
Gather as much down payment as you can BUT do not sacrifice your emergency fund.
The more money that you have for down payment for a new house, the better your chances of getting a good financing deal. This is hard enough during normal times and during these times of economic turmoil, it could even be harder. As such, you should not, at all costs, touch that emergency fund of yours.
Make sure that you pre-qualify before anything else.
This tip involves as much common sense as the first one. You have to know how much you can afford in total for a house. The same thing applies for the down payment. By pre-qualifying, you can find out the figures. Knowing exactly how much you can spend will make your home buying endeavors more decisive.
Get a rate lock.
It is easier said than done because the markets are fluctuating so much at the moment. But still, you have to lock in a rate at some point, otherwise, you might end up losing good rates. Look for options that will allow you to get a float down, that is you can negotiate your rate in case there is a considerable drop.
For those homeowners who are feeling the crunch of the economic times, the government has done something to help alleviate the pressure. Early this morning, it was reported that President Bush signed a bill that is aimed to provide relief for homeowners and the biggest mortgage groups in the country, Fannie Mae and Freddie Mac.
ABC News reports:
The Housing and Economic Recovery Act of 2008 will allow a limited number of homeowners who can’t afford their mortgage payments to refinance with government-backed loans. As many as 400-thousand families become eligible for help refinancing expensive mortgages. This will not help homeowners who have already been hit with foreclosure. The measure will also give the Bush administration new authority to control Fannie Mae and Freddie Mac.
“We look forward to put in place new authorities to improve confidence and stability in markets, and to provide better oversight for Fannie Mae and Freddie Mac,” White House spokesman Tony Fratto said. “The Federal Housing Administration will begin to implement new policies intended to keep more deserving American families in their homes.”
The whole idea is quite attractive, especially for those homeowners who are saddled with hefty mortgage payments. However, as the excerpt above states, those who have already had their homes foreclosed will not be affected by the bill. More so, the bill cannot encompass every single American family who has a mortgage. The figure that has been thrown around is 400,000. I am quite sure that the figure of families struggling with mortgage could easily be double this number. What about them?
With the waning economy you can bet that more and more people are thinking about and actually holding yard sales. This is the best time to get rid of your junk and also give those who need them the opportunity to get something they need at a cheap price.
Those who have experienced not so successful yard sales might, however, feel a little skeptical about being able to actually sell most of the items they put out. If you are one of those who feel a bit skeptical about holding your own yard sale remember that there are great benefits to having one including:
Making some money – This provides enough motivation for most people!
Cleaning up your house – IF you do clean up after the yard sale. At the least it will lessen the number of junk lying around.
Getting a jumpstart at beating consumerism – I’ve posted several times on consumerism. Holding a yard sale should make you realise how much unused (which means they’re not needed) stuff you have. If you’ve got that much stuff then why go one acquiring more stuff you don’t really need?
Helping the environment - Selling off all your extras means that they wouldn’t go to waste. They’ll be re-used, which is what more people need to do.
Family time – If you have a family the yard sale can be a family project. This will allow younger kids to learn more about responsibility, could be a time for you to instill goo values, and of course will be good quality time spent with everybody.
On my next post I will be giving some tips on how to get people to come to your yard sale.
Less time and effort on your part - Two of your most precious resources – time and energy – will be conserved by using a mortgage broker. Since you do not need to research the background of each and every lender, compare each and every package they offer, and negotiate with each one face-to-face, you can focus on your work and the other more important profitable things that you can do. Granted that you will need to spend time researching various mortgage brokers and choosing the best one you’ll find that choosing a mortgage broker that can deliver the service excellently will still entail less time and effort on your part.
Faster refinancing process – In truth the process of refinancing your home starts the very moment you do your research to find the best lender. By using a mortgage broker the whole process will be sped up significantly since they already have an extensive network of mortgage lenders that they can tap. They not only have contact with these lenders but also know the rates, policies, and packages each offers so that finding the deal that will suit your needs best will be easier for them to do. Remember the faster you get your home refinanced (assuming you get a really good deal) the faster you’ll start saving money.
Note though that you will only reap the benefits of these advantages if you get a good mortgage broker. So if you do decide that you want to go with a mortgage broker then invest time in finding a really good one that offers not only professional service but that shows care for their client. Remember, just like I said above the time you invest in finding a good mortgage broker will still be insignificant compared with the time you need to invest in order to find a comparable excellent deal with various lenders,
If you plan on refinancing your home you might want to consider using a mortgage broker this time instead of shopping around and directly approaching lenders. There are several advantages to using a mortgage broker including:
Getting the best rates - The reason why you can get the lowest rates possible by using mortgage brokers is because lenders give them the lowest possible deals because they know that brokers have lots of lenders courting them. Aside from this mortgage brokers are also given wholesale packages that drive down the costs so that mortgage brokers can offer their customers competitive rates. If you get a good mortgage broker you’ll find that the fear of having to pay more will be unfounded. It does not cost more to use the services of a mortgage broker. In fact, you’ll even be offered the best deals the lenders can offer.
Less frustration and stress – Dealing with lenders face-to-face can be really stressful. Because you are the one who needs the loan you’ll find that you need to “court” the lenders, which makes negotiating even a harder task than it already is. If you deal with mortgage brokers it is the other way around, though they are doing your service they are the ones that is courting you and not the other way around. What this leads to is a less stressful time for the borrower and a feeling of greater confidence in negotiating a deal with the broker.
To be continued…
The best way to get the best deal is not researching the firm/broker that will give you the best deal but by learning how to negotiate. Most homeowners actually feel intimidated by brokers so that in the end even if they get a good enough deal they don’t really get the BEST deal. When negotiating to refinance your home you should remember to haggle about the following:
1. closing fees
2. interest rate
3. application fees
What this means is that you need to negotiate not only with prospective lenders but with your current lender as well. Ask your current lender for the lowest possible closing fees. You can even negotiate to refinance your home with your current lender if they agree to give you lower interest rates and waive application fees.
Note that while lenders might seem firm about the lending policies almost all agree to adjust their rates if they realize that you know what you are talking about. In many cases appraisal fees and other fees included in the application fees can be waived or at least lowered so ask around and do not settle for the first discounted price they give you. Remember they want to close the deal as much as you do (if they deem you a safe investment) so use this knowledge to boost your confidence in your negotiation skills.
Note too that there are lots of good deals you can find online since online mortgage brokers usually have multiple offer for homeowners.
The very first thing you need to remember is to refinance at a lower cost, however not just because you can find a deal that offers lower interest rates means you’ll end up saving money.
A very good example of a lower interest rate deal that could go sour are adjustable rate mortgages (ARM). Like I mentioned in the previous post you cannot protect yourself from rising interest rates with this deal. In fact with ARMs interest rates usually change just within 6 months. Because of this, if you will still be paying for your mortgage for several years once you might end up paying for a higher interest than you are doing at the moment.
Another way you can end up having a bad deal even with lower interest rates is if you do not compute for the actual refinancing cost. When considering refinancing your loan you should consider the fees you need to pay and add them up. Compare this amount with the total amount you’ll be saving due to the lower interest. You might be surprised that the amount you will end up saving might be too little to be worth the bother or even negative, meaning you’ll end up spending more money!
When computing for the actual cost consider the following fees:
1. closing fees – paid to your current lender
2. appraisal fees – to new lender
3. loan fees
4. origination fees
5. title insurance
Ask your prospective lender for their complete list of fees just to make sure!
With economic downturn seeing foreclosure signs has made lots of homeowners think of putting up their own homes for sale before its too late. However, before you do put up the FOR SALE sign you might want to explore the possibility of refinancing your home. This option is the wisest course for many who have been delinquent with the mortgage payments lately and especially for those who mortgaged their homes before but didn’t do their homework and so ended up with mortgage terms that isn’t that manageable. If you are going to refinance your home though make sure that you:
Refinance at a lower interest – Having lower monthly payments is not enough you should look at the actual interest rates. If you intend to keep your home in the long rung then you should make long run decisions. You should find a solution that would benefit your family’s overall financial health and not go for refinancing just to get out of your current bind.
See if you can stay with your current lender – Having you home refinanced doesn’t always mean having to go to a different lender. If you have a good credit record and are only now having trouble chances are that they would be appreciative of your good record and be willing to help you out by letting you refinance with them and even give you lower interest rates.
Never opt for adjustable rate mortgages (ARM) - Even if you seem to be given a sweeter deal it is still wiser to stick with a fixed rate mortgage. The problem with an ARM is that you never know what will happen in the future and you definitely can not protect yourself from soaring interest rates. Choose a fixed rate mortgage if you don’t want to add to your worries.
to be continued…
