Ron's Blog

  • CONSIDER THIS: WHEN TO REFINANCE

    Refinancing your mortgage is something most homeowners consider at least once throughout the lifespan of their home loan. It allows you to pay off your previous loan by applying for a new one that has better financial advantages. While there are many good reasons to refinance, here are five common ones.

    • Scoring a lower interest rate. The number one reason homeowners decide to refinance is to secure a lower interest rate on their mortgage. Not only does this save you money in the long run and decrease your monthly payment, but you can start building equity in your home sooner.
    • Using an improved credit score. Even if interest rates have not dropped in the market, if you’ve improved your credit score over the last few years, you may be able to reduce your mortgage rate.
    • Shortening the loan’s term. If interest rates are decreasing, there is a chance you may be able to get a shorter loan term with little to no change in your monthly payment, allowing you to pay off your loan sooner.
    • Switching from an adjustable rate to a fixed rate. If you chose an adjustable-rate mortgage with great introductory rates when you initially financed your home, that rate may increase significantly over the years. By switching to a fixed rate while interest rates are low, you can protect yourself from future increases.
    • Cashing out home equity. If there is a big purchase or payment on the horizon, such as funding a wedding or going back to school, your best option may be to use the equity you’ve built in your home to borrow money at a lower cost.
  • THE DIFFERENCE BETWEEN HOME WARRANTY & HOME INSURANCE
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    When purchasing a new home, it’s important to do in-depth research on all facets of the homebuying process. One thing you’ll need to understand is how to best protect yourself and your investment if anything were to go wrong. Check out the information on home insurance versus home warranty below to educate yourself on your options.

    Home Insurance

    Homeowners insurance pays for any accidental damages and loss that are caused by fire, lightning strikes, windstorms, and hail, however, damage from earthquakes and floods is typically not covered. It also covers the replacement of personal property in case of theft or damage and liability if a person were to get injured in your home or on your property. According to American Home Shield, the average annual cost of a homeowner's insurance policy ranges between $300 and $1,000, and the bank usually asks you to obtain a policy before the mortgage is issued. Make sure to keep in mind that each type of coverage in the policy is subject to a limit and, in most cases, you will have to pay a deductible.

    Home Warranty

    A home warranty is designed to cover the cost of repairs and replacements of larger appliances and crucial systems in your home that may fail or break due to age and wear and tear. This includes but isn’t limited to HVAC, electrical, or plumbing components, kitchen appliances, and your washer and dryer. With a home warranty, you are required to pay premiums year-round, even if you do not use it, and it won’t cover damages if appliances were not maintained properly or if the damage is from a fire or other disaster.

  • WHICH DOWN PAYMENT STRATEGY IS RIGHT FOR YOU?

    You’ve most likely heard the rule: Save for a 20-percent down payment before you buy a

     home. The logic behind saving 20 percent is solid, as it shows that you have the financial

     discipline and stability to save for a long-term goal. It also helps you get favorable rates

     from lenders.

     

    But there can actually be financial benefits to putting down a small down payment—as low

     as three percent—rather than parting with so much cash up front, even if you have the

     money available.

     

    THE DOWNSIDE

     

    The downsides of a small down payment are pretty well known. You’ll have to pay Private

     Mortgage Insurance for years, and the lower your down payment, the more you’ll pay.

     You’ll also be offered a lesser loan amount than borrowers who have a 20-percent down

     payment, which will eliminate some homes from your search.

     

    THE UPSIDE

     

    The national average for home appreciation is about five percent. The appreciation is

     independent from your home payment, so whether you put down 20 percent or three

     percent, the increase in equity is the same. If you’re looking at your home as an investment,

     putting down a smaller amount can lead to a higher return on investment, while also leaving

     more of your savings free for home repairs, upgrades, or other investment opportunities.

     

    THE HAPPY MEDIUM

     

    Of course, your home payment options aren’t binary. Most borrowers can find some

     common ground between the security of a traditional 20 percent and an investment-

    focused, small down payment. Your trusted real estate professional can provide some

     

     answers as you explore your financing options.

  • Measuring Your Ability to Achieve the American Dream

    Measuring Your Ability to Achieve the American Dream

    Measuring Your Ability to Achieve the American Dream | Keeping Current Matters Forbes.com recently released the results of their new American Dream Index, in which they measure “the prosperity of the middle class, and…examine which states best support the American Dream.” The monthly index measures several different economic factors, including goods-producing employment, personal and commercial bankruptcies, building permits, startup activity, unemployment insurance claims, labor force participation, and layoffs. The national index score was rounded out to 100 in January and saw a modest jump to 100.5 in February. Alaska represented the lowest score on the index at 80.7, due mostly to the recent collapse in oil prices. Nevada came in with the highest score at 108.8, boosted by big gains in goods-producing jobs and new construction activity. The full results can be seen in the map below. Measuring Your Ability to Achieve the American Dream | Keeping Current Matters Forbes Senior Editor Kurt Badenhausen explained why many states saw a boost in the index last month:
    “[B]usinesses are hiring in part in anticipation of tax cuts and less regulation... Many areas of the country have experienced strong upticks in employment and construction, as well as declines in unemployment claims since the start of the year.”

    Bottom Line

    The American Dream, for many, includes being able to own a home of his or her own. With the economy improving in many areas of the country, that dream can finally become a reality

  • You Can Never Have TMI about PMI

    You Can Never Have TMI about PMI | Simplifying The Market

    You Can Never Have TMI about PMI

    When it comes to buying a home, whether it is your first time or your fifth, it is always important to know all the facts. With the large number of mortgage programs available that allow buyers to purchase a home with a down payment below 20%, you can never have Too Much Information (TMI)about Private Mortgage Insurance (PMI).

    What is Private Mortgage Insurance (PMI)?

    Freddie Mac defines PMI as:

    “An insurance policy that protects the lender if you are unable to pay your mortgage. It's a monthly fee, rolled into your mortgage payment, that is required for all conforming, conventional loans that have down payments less than 20%.

    Once you've built equity of 20% in your home, you can cancel your PMI and remove that expense from your mortgage payment.”

    As the borrower, you pay the monthly premiums for the insurance policy, and the lender is the beneficiary. Freddie Mac goes on to explain that:

    “The cost of PMI varies based on your loan-to-value ratio – the amount you owe on your mortgage compared to its value – and credit score, but you can expect to pay between $30 and $70 per month for every $100,000 borrowed.” 

    According to the National Association of Realtors, the average down payment for all buyers last year was 10%. For first-time buyers, that number dropped to 6%, while repeat buyers put down 14% (no doubt aided by the sale of their home). This just goes to show that for a large number of buyers last year, PMI did not stop them from buying their dream homes.

    Here’s an example of the cost of a mortgage on a $200,000 home with a 5% down payment & PMI, compared to a 20% down payment without PMI:

    You Can Never Have TMI about PMI | Simplifying The Market

    The larger the down payment you can make, the lower your monthly housing cost will be, but Freddie Mac urges you to remember:

    “It's no doubt an added cost, but it's enabling you to buy now and begin building equity versus waiting 5 to 10 years to build enough savings for a 20% down payment.”

    Bottom Line

    If you have questions about whether you should buy now or wait until you’ve saved a larger down payment, let’s get together to discuss our market’s conditions and to help you make the best decision for you and your family.

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