Archives for December 2016

Buying a New Home? Use This Checklist to Ensure Your Finances Are in Order

Buying a New Home? Use This Checklist to Ensure Your Finances Are in OrderBuying a home is a significant expense. It doesn’t matter whether you’re a first-time buyer or have experience. Unless you have a large pile of cash, you’ll need to ensure your finances are in order before closing. In this post we’ll explore four financial items you’ll want to check off before buying a new home.

Figure Out Your Current Monthly Budget

First, you’re going to want to sort out your monthly budget. If you’ve never done a budget before, start with something basic. Open up a spreadsheet or take out a piece of paper. Make two columns: ‘income’ and ‘expenses’. Fill in each column with the amounts that you make or spend each month. Bank, credit card and other statements can help with this process. It’s a good idea to go back at least 3 months to ensure you’re capturing your true spending.

Make A Debt Management Plan

Do you have any debts? If so, you’ll want to make a plan for how you’re going to manage these when you buy a new home. For example, you may have a car payment, student loans, a line of credit or credit card debt. Write down your debts, how much you owe and when payments are due. If any debts are due monthly, make sure you include those in your budget.

Keep in mind that your outstanding debts may impact your ability to borrow for a mortgage as well. If you plan on taking out a mortgage to pay for your new home, it’s best to get your debts figured out beforehand.

Understand All Your Real Estate Costs

Next, you’ll want to determine what all your real estate costs are going to be. If you’re not yet close to the bidding or closing process, this might be a bit challenging. But ask your real estate agent for a breakdown of what you can expect to pay for a home in your price range.

Set Up An Emergency Savings Cushion

Finally, you’ll want to set up a financial cushion in case of emergencies. It’s not much fun to think about, but losing a job or having a health event is possible. Most financial experts recommend having at least six months of expenses saved up. Of course, this is always easier said than done. What’s important is that you have at least some cash tucked away, just in case. If you can, save a bit extra each month or from each pay check and add to this emergency fund.

When you’re ready to buy a new home, a professional mortgage agent is your best bet for success. Reach out to us today and learn more about how affordable a new home in your community will be!

Not so Fast: 3 Reasons Why You Might Want to Avoid Paying Off Your Mortgage Early

Not so Fast: 3 Reasons Why You Might Want to Avoid Paying Off Your Mortgage EarlyThe burden of debt, especially when it comes to the high price tag of a home, can be a significant worry to many people. However, what many homeowners may not be aware of is that paying your mortgage off early can actually have a negative impact on your financial health. Whether you’ve recently come into money or you’re working hard to bump up your monthly mortgage payments, here are some reasons you may want to hold off on paying it off too quickly.

Creating A Credit History

It can certainly be a weight off your mind to pay down your mortgage if you inherit a substantial sum of money, but your monthly payment actually has the added benefit of positively impacting your credit history. While paying down debt may free up your mind to think about other things, the month-to-month payment of your mortgage will prove your reliability to a lender and enables you to take advantage of the tax breaks associated with consistent mortgage payments.

A Limited Disposable Income

It may be fulfilling to pay down your debt by foregoing some of your monthly expenditures, but a very strict budget can be very limiting. Forcing yourself to save money on a consistent basis and sticking with a budget are good in the long run, but cutting back on all the things you love in order to pay off more debt can make for unhappiness and added stress. It’s important to find a balance between paying down debt and enjoying life.

Extra Money To Invest

The feeling of being debt-free is a good one, but putting most of your money into your mortgage will likely leave you with nothing to invest or save. Many homeowners think that the savings will make up for the money that’s not being invested, but this is not necessarily the case. According to Elle Kaplan, CEO of LexION Capital Management, “A smart investment plan is very likely to outmatch any savings you’d get from paying off a home early.” Instead of putting all your funds into your mortgage, set some aside for saving and investing.

Many homebuyers think it’s a good financial move to pay down their mortgage early, but it can actually be better for your credit and bank balance to make consistent payments and start investing early. If you’re currently in the market for a home, contact one of our mortgage professionals for more information.

Self-Employed? Here’s What You’ll Need to Get a Mortgage Approval

Self-Employed? Here's What You'll Need to Get a Mortgage ApprovalThere’s a lot of flexibility and personal freedom associated with self-employment that can be a great benefit to your lifestyle and your pocketbook. However, because of the somewhat unpredictable nature of self-employment, it can make acquiring a mortgage a little more difficult. If you’ve recently become self-employed or have been in the game for a while, here are some things you may want to consider before submitting your mortgage application.

Putting More Money Down

20% is often considered the magic number when it comes to the down payment because this will allow you to avoid homeowner’s insurance. However, if you’re self-employed, you may want to consider putting even more money down as this will be an even stronger signifier to lenders that you’re prepared for homeownership and in control of your finances. While your down payment will provide you with equity instantly, a higher payment will also lower your monthly cost and make your finances even more secure from month to month.

Minimizing Your Debt

The amount of debt a potential homeowner has can adversely affect any mortgage application, but in the event you’re self-employed, a high debt load means even more money is being paid out of a salary that is not necessarily predictable. By paying off the debts you can before applying for your mortgage, you’ll be able to invest that much more of your hard-earned money into your monthly payment without breaking the bank and cutting monthly expenditures.

A History Of Self-Employment

Being self-employed means you’ll have more to prove to your lender, but if you have a spotty self-employment history and long periods without bringing in any income, this will make it even harder. Instead of jumping into the mortgage market soon after becoming self-employed, try and have at least two years of successful self-employment behind you. By being able to prove this, the lender will see that you’re a solid financial bet and an experienced professional who will be able to find work when it’s required.

The nature of being self-employed and the fluctuations in income that can come along with it can make a mortgage lender nervous. However, by having a solid history of self-employment behind you and minimizing your debt load, you’ll be able to prove to the lender that you’re serious about home ownership. If you’re currently perusing the market for a home, contact one of our mortgage professionals for more information.

Winter’s Coming: Learn How to Prepare Your Plants, Trees and Other Landscaping

Winter's Coming: Learn How to Prepare Your Plants, Trees and Other LandscapingFrom the approaching holiday season to the New Year, there are a lot of things to prepare for when it comes to the winter. It’s important, though, not to forget about the needs of your lawn for the upcoming cold season. If you’re wondering how to ready your trees, your plants and your yard, here are some tips for saving your vegetation until the springtime.

Fertilize For Grass Growth

It might seem like a waste of time to fertilize your grass going into the winter months, but this is actually the perfect time to prep it for spring. As fertilizer will provide much-needed nutrients to the grass in the months when there is less growth, it will actually stimulate improved growth down the road. It’s just important to ensure that you provide a consistent amount of fertilizer so a patchy-looking yard can be avoided. Since weeds scale back in winter, like most other varieties of plants, it can also be an ideal time to apply a herbicide.

Garden Plants And Perennials

While plant maintenance duties like pruning can be done in the spring or fall months, it can actually be a better idea to give your plants the summer months to grow before diving in. Cutting them back will enable the plant to focus its energy on maintenance through the cold winter months, so it’s a good idea to get to work in before the first signs of cooler air set in. If you happen to have plants that won’t last through the winter, you’ll want to compost them so they can be used for soil in the next gardening season.

Clearing Away The Wood

Beyond the garden and the lawn, it’s also worthwhile to provide a little care for your favorite trees before the winter hits. While you’ll want to be cautious about what you do and may want to consult with a gardening professional, clearing away dead branches can help your tree retain its health throughout the year. You may notice the difference in your trees when the spring rolls around again, as they’ll likely have a revitalized look and show signs of new growth.

Winter is a busy time for many people, but it’s important to make the time to fertilize your grass and prune your perennials so your yard will be ready for spring.

What’s Ahead For Mortgage Rates This Week – December 12, 2016

As 2017 winds down, analysts are forecasting economic developments for 2017. Forbes identified three indicators that the U.S. housing market has recovered. Mortgage rates rose again last week; jobless claims fell and consumer sentiment jumped rose five points. The details:

Housing Market Recovery Complete: Forbes

Three conditions were cited by Forbes as evidence that the housing market has recovered:

Analysts said that homeowners are putting their homes on the market after years of waiting for home prices to peak. On the flip side, mortgage rates are expected to rise further and home buyers may be taking a “now or never” plunge into buying homes before market conditions and mortgage rates combine to make home prices unaffordable.

The Federal Reserve reported that U.S. mortgage debt increased by 1.90 percent in Q3 2016; this was the highest growth rate for mortgage debt since Q3 2008. While population growth and household formation are lower, the overall ratio of mortgage debt to disposable income is near historically low levels. Stricter mortgage qualification standards are keeping home buyers from borrowing mortgage loans that they can’t repay.

After years of high demand for short supplies of available homes, home builders are ramping up construction. Housing starts rose by 25 percent in October and matched construction rates not seen since mid-2007.

Mortgage Rates Rise, New Jobless Claims Dip

Freddie Mac reported higher mortgage rates last week. The average rate for a 30-year fixed rate mortgage rose five basis points to 4.13 percent. The average rate for a 15-year fixed rate mortgage was two basis points higher at 3.36 percent. The average rate for a 5/1 adjustable rate mortgage also rose by two basis points to 3.17 percent.

New jobless claims fell last week to 258,000 new claims, which matched expectations and was lower than the prior week’s reading of 268,000 new claims. Job openings held steady in October with a reading of 5.50 million.

What’s Ahead

Next week’s economic calendar includes readings on retail sales and inflation along with the Federal Reserve’s Federal Open Market Committee Statement and a press conference by Federal Reserve Chair Janet Yellen. The National Association of Home Builders Housing Market Index will be released in addition to Commerce Department reports on housing starts and building permits issued. Weekly readings on mortgage rates and new jobless claims will also be released.

Home Equity Tips: 3 Upgrades That Will Make Your House Worth More When You Sell

Home Equity Tips: 3 Upgrades That Will Make Your House Worth More When You SellIt’s likely that your house is your biggest asset, so when it comes time to sell it you’ll want to do everything you can to maximize your profit. Good news the value of your home isn’t solely determined by the market, there are several ways in which you can increase its value by making upgrades before listing.

Let’s take a look at 3 top upgrades that will make your house worth more when you sell.

1. Make It Profitable

Not surprisingly, the number one way in which you can increase the value of your home is to add an income suite within the property. If your home has potential to earn buyers’ money it will inevitably be more valuable than a property that doesn’t have any potential cash flow for the owner. Whether it’s a basement suite or a floor that’s been made into a separate unit, income units are a huge bonus for buyers. Making money while paying off their home would be a dream come true for most people, and it’s a dream that buyers are willing to pay a high price for.

2. Kitchen Is Key

Kitchens are often the first area to become dated or worn out within a home, and they’re the most important part of the house when it comes to valuation. Make sure that your cabinets and countertops are updated before selling, and modernize the design with neutral fixtures that are current yet adaptable to many tastes. Having a fresh kitchen shows both function and fashion to buyers. After all, no one wants to see rusty old appliances and dingy lights when walking into the focal point of a home.

3. Beautify The Bathrooms

Besides the kitchen, bathrooms are the second most important aspect of a home when it comes to valuation. Having multiple bathrooms within a home automatically increases its value significantly, especially if at least two have at least three pieces within them, containing at least a sink, toilet, and either a shower or bath. Ensuring that your bathrooms are leak-free, look meticulously clean, and have a modern design is a fantastic way to make sure that buyers will be impressed during an open house.

Bonus tip: if installing a new toilet, consider purchasing one that is eco-friendly with dual-flush options. As people become more and more environmentally conscious, fixtures such as these will cater to a broad spectrum of lifestyle values.

If you’re ready to prepare your home for sale and are looking for more ways in which you can maximize its market value, contact your local mortgage professional today.

5 Ways That a Mortgage Can Be a Huge Benefit to Your Financial Future

5 Ways That a Mortgage Can Be a Huge Benefit to Your Financial FutureFor many people, investing in a house is one of the most important purchases they will make in their lifetime. However, alongside having the comfort of your own home, there are many financial benefits associated with buying in. If you’re currently perusing the market for opportunities, here are some reasons to consider investing a little sooner.

Get Away From Inflation

If you have an adjustable-rate mortgage, your interest rates will certainly fluctuate from time to time, but owning a home actually allows you to guard against the reality of inflation, which can be a significant burden as a renter. While the price of housing and apartment rentals can rise considerably with inflation, your monthly mortgage cost will be relatively fixed.

Hold On To More Of Your Money

Renting may be an easier financial obligation than home ownership, but the money you invest into a home each month contributes to your equity, and this is a benefit for your financial future. While rent money will be gone when the month is over, equity provides a consistent means of building wealth.

Buy At A Lower Price

The cost of home ownership may vary around the country, and while it’s certainly climbing in many urban centers, home prices are lower overall. This means that, instead of having to scrounge for a down payment, you’ll be able to invest a little less and maintain a better bank balance.

Cue The Tax Breaks

Many people hold off on home ownership because of the costs of property tax and maintenance, but there are financial boons outside of the money you invest. When tax time comes, you can receive tax deductions for costs like mortgage interest, property taxes and even private mortgage insurance that make buying in a little easier to bear.

Own A Rental Property

Whether you are a first-time buyer or you’ve delved into the market before, having a home in an up-and-coming neighborhood can also be an option, as this will enable you to rent it out and reap the financial rewards. While this may be a more feasible option later on in life, it can be a means of substantial additional income.

Many people hold off on owning a home because of all the associated costs, but it can be of benefit to buy into the market earlier to reap the financial rewards. If you are currently considering home ownership, contact one of our mortgage professionals for more information.

3 Simple Tips for Boosting Your FICO Credit Score Before Applying for a Mortgage

3 Simple Tips for Boosting Your FICO Credit Score Before Applying for a MortgageThere are a variety of factors that are involved in getting your mortgage approved, but few things will have more of an impact than your FICO score and the credit history that goes along with it. Instead of leaving your score up to chance when submitting your application, here are a few ways that you can boost your financial wellbeing and leave your credit score better off than it was before.

Put More On Your Card

It’s important to put purchases on your credit card that you can afford to pay off consistently, but many people are not aware that how much debt you owe can actually positively contribute to your credit score. While it’s good to use up to 30% of your available debt load, a significantly higher percentage than this can be a signal to lenders that you are experiencing financial difficulties. By putting everyday items on credit, it will be easier to give your score an instant boost.

Clear Your Credit History

Many people who think they have bad credit are too afraid to even review it, but it’s very important to take a look at your credit history when it comes to taking control of your finances and your FICO score. If there happens to be incorrect information on your credit report, this will enable you to contact the appropriate lenders and dispute the charges so they can be corrected prior to your mortgage application. It may not seem significant, but this can actually have a marked impact on the outcome of your application.

Make Your Payments On Time

It’s often the case that those who are struggling with debt may push away the bills altogether and give up on the minimum payment, but it’s very important that the minimum is made to keep your financial health in check. It may take a few months to see the results of putting down this amount before the due date, but it will improve your credit over time and forge good habits for the future.

Your credit score is an important aspect of determining your financial health for lenders, and this means that your credit history is of significant importance when it comes to your mortgage. Instead of leaving it up to chance, ensure that you’re making the minimum payments and correct any discrepancies in your credit report. If you’re currently in the market for a home and are considering your options, contact one of our mortgage professionals for more information.

3 Key Reasons Why Buying Your First Home Is Like Planning a Wedding

3 Key Reasons Why Buying Your First Home Is Like Planning a WeddingYou may not see the connection right away, but buying a home and planning a wedding are two experiences that require certain skills and challenge you in similar ways. Check out the three key similarities below!

1. Budget

Whether you’re buying your first home or planning a wedding, you are likely facing one of the biggest financial obligations of your life. That’s why, in both cases, it is essential that you pick a realistic budget and stay within it.

Sounds simple, but in either case it can be difficult! Unexpected obstacles may force you to spend more than you planned, or you may find yourself wanting to overspend as you find things that would be “just perfect” additions even though they don’t fit your budget. These temptations can be expected, but it’s important to remember the big picture. When it comes to your budget, pick it and stick it.

2. Details

When it comes to a home purchase or a wedding, there are countless details to consider. It’s not a simple, pre-packaged purchase, there will always be big decisions that you have to make and if you overlook something you may regret it later on.

Some decisions that you face will be similar in both experiences: Does the location work for you? Does it work for your friends and family? What is the parking situation? Is it appropriate for the climate? Will you be satisfied with your decision in the long-term?

Other details will be more unique to the situation: Do you need a cocktail hour? Do you need a walk-in closet? What style of photography would you like? Is there too much traffic noise?

Either way you’ll have lots to think about, and you’ll become acutely aware of ‘the little things.’

3. You’ve Got Style

Both your wedding and your home say something about you, they’re a reflection of your personal style. When being presented with so many choices that are particularly catered towards your personal taste, you’ll learn what you like and what you don’t. However, you’ll also learn what it is that you absolutely need, and what you’re willing to budge on.

Whether you’re choosing a wedding dress that is both gorgeous and functional for your ceremony or deciding whether or not you need an extra bedroom in your home, you’ll learn what it is that you’d want in a perfect world, and what is absolutely necessary for your current situation.

What’s Ahead For Mortgage Rates This Week – December 5, 2016

Last week’s economic news was plentiful with releases on Case-Shiller Home Price Indices and pending home sales. Readings on government and private sector jobs created, the national unemployment rate and weekly readings on new jobless claims and Freddie Mac’s mortgage rates survey were also released.

CaseShiller: Western Cities Dominate Home Price Growth

Case-Shiller’s 20-City Home Price Index reported that Seattle Washington topped year-over-year home price growth with an increase of 11.00 percent. Portland, Oregon followed closely with a reading of 10.90 percent, and Denver Colorado held third place with year-over-year home price gains of 8.70 percent.

San Francisco, California, which had posted high home price gains in recent years, posted a month-to-month reading of -0.40 percent and a year-over-year gain of 5.70 percent. Analysts said that this reading was evidence that home prices in high cost areas were topping out. Affordability, strict mortgage requirements and low inventories of available homes continued to present obstacles to home buyers.

Mortgage Rates Rise, Pending Home Sales Dip

According to the U.S. Commerce Department, pending home sales dipped in October to 0.10 percent as compared to a growth rate of 1.50 percent in September. Winter weather and holidays can cause would-be home buyers to postpone their home searches until spring.

Freddie Mac reported higher mortgage rates last week, although the 10-year treasury rate, which is tied to mortgage rates, was unchanged from the prior week. The average rate for a 30-year fixed rate mortgage was five basis points higher at 4.08 percent; the average rate for a 15-year fixed rate mortgage rose by nine basis points to 3.34 percent and the average rate for a 5/1 adjustable rate mortgage rose by three basis points to 3.15 percent. Mortgage rates have risen by 51 basis points in three weeks. This trend, coupled with high home prices, doesn’t bode well for first-time and modest income home buyers.

Consumer spending for October increased by 0.30 percent as compared to predictions for a reading of 0.50 percent and September’s 0.70 percent reading. The core inflation reading for October was unchanged and in line with analyst expectations at 0.10 percent. The core reading excludes volatile food and fuel sectors.

Labor Reports: Job Creation Grows, Unemployment Rate Lower

According to the Labor Department’s Non-Farm Payrolls report for November, 178,000 government and private sector jobs were created as compared to expectations of 200,000 jobs created and October’s reading of 142,000 jobs created in October. According to the Commerce Department, the national unemployment rate for November was 4.60 percent as compared to the expected reading of 4.90 percent and October’s reading of 4.90 percent. Analysts noted that while a lower reading could indicate good news, it was also the result of fewer workers in the work force. The unemployment rate is based on unemployment claims filed by those actively seeking work; it does not include those underemployed or those who have stopped seeking work.

First-time jobless claims rose to 268,000 as compared to expectations of 250,000 new claims and the prior week’s reading of 251,000 new claims filed.

In spite of higher mortgage rates and dubious labor reports, the Consumer Confidence Index rose to 107.1 in November from October’s reading of 100.8; Analysts had expected an index reading of 102.5.

Whats Ahead

Next week’s economic reports include releases on job openings and consumer sentiment along with weekly readings on mortgage rates and new jobless claims.