Bill Ryan's Blog
Ready to buy a house? It pays to be proactive, especially if you hope to streamline the process of acquiring a terrific residence at a budget-friendly price.
A superb house is likely to stir up interest from large groups of homebuyers. Fortunately, with a proactive approach, you can stay ahead of the homebuying competition and boost your chances of securing a wonderful house.
Ultimately, there are several best practices for proactive homebuyers, and these practices include:
1. Search for Homes Early and Often
The early bird catches the wom. Much in the same vein, a proactive homebuyer is better equipped than others to achieve his or her desired results.
Keep a close eye on the housing market – you'll be glad you did. If you monitor home listings in your city or town, you can quickly identify potential properties that you may want to buy.
In addition, evaluate housing market trends and patterns. With this housing market data in hand, you can differentiate between a buyer's and seller's market.
2. Get Pre-Approved for a Mortgage
Meet with several banks and lenders in your area. By doing so, you can explore a variety of mortgage options and select one that complements your finances.
There is no shortage of mortgage options at your disposal. For example, many homebuyers prefer a 30-year fixed-rate mortgage, which guarantees they will pay the same amount each month for the life of a mortgage. On the other hand, some homebuyers choose a 15-year adjustable-rate mortgage, which features lower upfront payments that gradually increase over time.
If you're uncertain about which mortgage option to select, there is no need to worry. Banks and credit unions employ friendly, knowledgeable mortgage professionals who can help you make an informed decision.
Perhaps best of all, meeting with mortgage professionals guarantees you can receive expert responses to your concerns and questions. These mortgage professionals will devote the necessary time and resources to assist you and make it simple for you to select a great mortgage.
3. Collaborate with a Real Estate Agent
If you want to enter the housing market, there is no reason to wait. In fact, if you contact a real estate agent today, you can immediately launch a successful homebuying journey.
A real estate agent is dedicated to your homebuying success. He or she first will learn about your homebuying goals, ensuring you can start the homebuying journey on the right foot. Then, this housing market professional can help you narrow your search for your dream residence.
In most instances, a real estate agent will set up home showings, keep you up to date about new residences as they become available and help you submit home offers. This housing market professional also provides a one-of-a-kind homebuying resource. And if you ever have homebuying concerns or questions, a real estate agent is ready to respond to them.
Don't wait to kick off a homebuying journey. Instead, use the aforementioned tips, and you can become a proactive homebuyer.
Adjustable rate mortgages are also known as “ARM” loans. These are home loans with monthly payments that move up and down along with interest rates and the market. There’s different periods that occur throughout the time of the adjustable loan including an initial period where the rate is fixed for a certain amount of time. The rates will change along with preset intervals of change.
Rates Start Lower Than Fixed Rate Mortgages
Interest rates during the fixed rate period of an adjustable mortgage are usually lower than that of fixed-rate mortgages. The most common type of adjustable rate mortgage is called the 5/1 ARM. This means that the rate is locked for a total of 5 years before it becomes truly adjustable. After the 5 years the rate will change every year. Other forms of ARM loans are the 3/1, the 7/1, and the 10/1.
Rate Indexes And Margins
Following the fixed-rate period, the interest rate adjusts with what’s titled the index interest rate. This rate is set by the market and is released periodically by an independent party. Since there are a variety of indexes, your loan will state which index your adjustable rate mortgage will follow. To set your exact rate, your lender will look at the index and then add a number of percentage points that has already been set in place. This is called the margin. For example, an index rate of 2.5 percent and a margin of 2 will equal an interest rate of 4.5 percent. As the index changes, this number will go up and down.
Adjustable Rate Mortgages Come With Caps
If you do decide to go with an adjustable rate mortgage, you should know that you’re protected from extreme rate increases. These loans come with caps that limit the amount that both rates and payments can change by. There are several different kinds of caps including:
Periodic Rate Cap
This limits the amount that an interest rate can change from one year to the next.
Lifetime Rate Cap
This type of cap limits how much the interest rate can change overall throughout the life of the loan.
Payment Rate Cap
This limits how much the monthly payments can rise over the life of the loan in a dollar amount. This is different than other caps, since it denotes dollars instead of percentage points.
Is This Type Of Loan For You?
Adjustable rate mortgages can be good, depending on the state of the economy and your own financial situation. Stay educated and shop around in order to get the best rates available for you.
It must have been frightening, in the days before the internet, to move to a new place that you knew little about. The culture, the people, the things to do--all of these things are now at our fingertips thanks to Google and others.
However, it can still be difficult to get used to a new town, especially if you’re moving far away from your previous home. So, in this article, I’m going to give you some tips on how to investigate your new town. That way, you’ll have a good idea of what kind of things you can do for fun, where to eat, and countless other things you might want to know about the place you’ll soon call home.
The lay of the land
A good place to start your search is on Google Maps. From here you can explore your future neighborhood; find out how close you are to grocery stores, parks, hospitals, and even get an estimate on how long your work commute will take each day.
Since many of these places will have ratings and reviews, you can also take some time to read the reviews for popular places around town.
Eating around town
It can seem like you’re always flipping a coin when you eat at a new restaurant. When you move to a new town, you’ll have to discover new favorite places to eat. However, you don’t have to do these experiments on your own.
Check out Yelp reviews for local restaurants and cafes to get a sense of the pricing and atmosphere. This way you’ll give yourself the best possible chance of enjoying the experience.
Meeting new people
Making friends is hard enough as an adult. In today’s world, many people meet their friends online or through other connections, rather than simply hanging around with their neighbors.
Luckily, sites like Facebook and Meetup make it easier to introduce yourself to like-minded people.
Browse local meetups that you’re interested in, and don’t be afraid to try out a new activity or attend a paint night--you might meet new people and discover a new hobby all at once.
Most towns have a strong presence on Facebook in terms of things like groups and events. Joining local groups will give you an idea of the type of things people do for fun around town and give you a way to introduce yourself to new people.
Read the news
Many towns are covered by a local or regional newspaper. They can often be found online or at a local library or cafe. These newspapers are often the key to discovering the good and the bad about your new home, tipping you off to the things you’ll want to pay attention to when you move.
Having equity in your home is an incredibly valuable thing. It allows you to borrow against your house and shows that the value of your investment is rising. Equity defined is the difference between your home’s value and the amount you still owe on the home. Equity allows you to move forward with other properties and sell your current one.
As you pay down your mortgage, your equity increases. There is, however, always a risk of an equity slide where values drop a bit. There are a few ways that you can help your home’s equity value to increase faster.
Pay Towards The Principal
The first few years that you’re a homeowner, you’ll be paying a lot towards the interest and only a little towards the principal value of the loan. The quicker you pay down your home loan, the faster you’ll increase the equity of your home. Check your budget and see how much extra you may be able to pay. Then, talk with your lender to see if there are any pre-payment penalties.
Complete Home Improvement Projects
You may not know that many home improvement projects can increase the value of your home substantially. There are many projects that you can complete in your home that won’t break the bank yet will give you a significant return. You can start simple, or think big. Some of the best home improvement projects that will add value to your home include:
- Complete kitchen remodel
- Replacing countertops
- Refinishing cabinets
- Installing new appliances
- Replacing garage doors
- Bathroom remodel
- Putting on addition
- Landscaping renovations
Any of these home improvement projects can add value to your home, bringing the equity value of the home up. Even if you’re not planning on taking out any equity in your home for some time, any improvement projects that you choose to do are beneficial for both you and how your home affects your finances.
Increase The Amount Of Your Downpayment
You can increase the value of a home before you even buy it. If you put the traditional 20% down on a house, you’ll build equity a bit faster than if you put down a lower amount such as 3% or 5%. If you have already purchased your home, you can ask your lender to do what’s called a cash-in refinance. This type of refinance is where you bring cash to the refinancing closing table in order to lower the balance of your mortgage.
When you find a home that you love, you probably already have been pre-approved by a bank for a certain amount that will enable you to buy a home. Once you put in an offer on the home and it’s accepted, however, you may need to take a step back. The appraisal can help you to know what the value of the home actually is. The bank may decline your loan based on the appraisal This is one of the most important steps to obtaining the financing that you need to purchase a home.
What Is An Appraisal?
In a nutshell, an appraisal protects the bank from investing in a property that’s worth less than what they’re paying for it. This process also protects you as a buyer from buying a property that’s worth less than what you’re expecting it to be worth.
Although the appraisal makes sense financially, it doesn’t mean that the process won’t be emotional for you as a buyer and for the sellers as well. The appraisal can in fact make or break the purchase of what you consider as your dream home. There’s a lot of data that’s collected for the appraisal, which can cause nerves to be shot on both sides while the value of the home is being calculated.
What’s The Difference Between The Inspection And The Appraisal?
A home appraisal is much different than an inspection. The home inspection is important in its own right. As a buyer, you hire a home inspector to find any potential problems or hazards that could be big issues for you in the future as a homeowner. While property appraisers will make note of glaring issues, they won’t check out the nuts and bolts of the home like a home inspector will. The home inspector checks out everything from the air quality to the chimney to the toilet and sinks. There’s many things that will affect your home appraisal. In other words, if you’re a seller, you want to get major issues fixed before you put your home on the market. Home inspections will be very important for different reasons to you as a buyer since it will be valuable to you in the future. Appraisers may request an inspection if they notice something serious within the home, but they are more interested in the value of the property than the direct problems that are within the home.
Who Will Pay For The Appraisal?
Generally, the seller will pay for the home appraisal along with the closing costs. This can be a few hundred dollars. In certain circumstances the buyer may agree to pay for the appraisal, however.
What Goes Into Calculating The Worth Of A House?
Appraisers look at many different factors including:
- The square footage of the property
- The number of bedrooms
- How many bathrooms the home has
- The condition of the home
- How much have comparable properties have sold for in the area
- Safety issues
- Other factors pertaining to health and safety
The appraisal process can seem complicated, but once you’re educated on the matter, you’ll be prepared when it gets to that point in the home buying process.