Jul 2, 2013 | Home Financing Tips
What if you could accelerate the mortgage payment on your home so that you own your property several years earlier than your 15 or 30 year term?
Making your final mortgage payment and owning your house is an incredibly good feeling and there is a simple way that you can bring about that rewarding day much sooner.
By making one extra mortgage payment every year, you will be able to pay off your mortgage years earlier without putting a lot of stress on your present day finances. Although it might not seem like a lot, just one extra payment per year can help you to significantly reduce the length of your mortgage.
For example, if you have a 30 year mortgage with a fixed rate, it could be possible to pay off your loan in 25 years instead of 30 when you make an extra payment per year. You will also very likely be able to save thousands of dollars over the years in interest charges.
How to Fit the Extra Payment Into Your Budget
If you think that your budget is too tight to squeeze in the extra yearly payment, it’s time to start thinking about what adjustments you can make. With a bit of clever budgeting, you can find the extra cash needed.
First of all, break the extra payment down by dividing it by 12. For example, if your monthly mortgage payment is $1600, you will need to save an extra $133 per month to be able to make a full extra payment every year. Or, you could think of it as $33 per week or $4.75 per day.
Surely you can survive on $4.75 per day less than you are spending right now, right?
There are many ways that you could find this extra money. It’s the difference between eating at a restaurant or cooking at home once or twice per week, bringing home-brewed coffee to work in a thermos rather than going to the expensive coffee shop, or cancelling a cable TV package that you never watch. Take a look at your budget so that you can determine where you can cut your expenses.
Once you make your goal of an extra payment every year, not only will you see that the savings program was easier than you thought it would be, but you might decide to accelerate even more so that it will be even sooner when you have the satisfaction of owning your home.
For more information about the optimal plan for the mortgage on your Massachusetts home, feel free to contact me by phone or email.
Jul 1, 2013 | Housing Analysis
The past week was active for economic news and mortgage rates. The aftermath of the Fed’s indication that it may start dialing back its multi-billion dollar monthly purchases of Treasury and mortgage backed securities has sent mortgage rates to record highs.
If you’re thinking of buying a home, this may be the last chance for finding the best deal on mortgage rates; meanwhile, home prices continue trending up as well.
Here’s the scoop on last week’s activity affecting real estate markets:
Tuesday’s Case-Shiller Composite Indices for April demonstrate the momentum of recovery in many housing markets. As of April, national home prices had increased by 12.10 percent as compared to April 2012. April’s reading also exceeded March’s reading of 10.10 percent year-over-year.
FHFA released its home prices report for April and noted that the average price for homes with mortgages owned by Fannie Mae or Freddie Mac increased by 7.40 percent, which slightly surpassed the March reading of 7.20 percent.
The Department of Commerce released New Home Sales for May and reported 476,000 new homes sold on a seasonally-adjusted annual basis. This exceeded expectations of 453,000 new home sales and also surpassed April’s reading of 454,000 new homes sold.
Wednesday brought the Gross Domestic Product (GDP) report for the first quarter of 2013. The GDP grew by 1.80 percent against expectations of 2.40 percent and the previous quarter’s growth, also 2.40 percent.
Freddie Mac’s Primary Mortgage Market Survey (PMMS) brought the days of bargain basement mortgage rates to a halt as average mortgage rates for a 30-year fixed rate mortgage moved from last week’s 3.93 percent to 4.46 percent. Average rates for a 15-year fixed rate mortgage rose from 3.04 percent 3.50 percent. This was the largest weekly jump in mortgage rates in 26 years.
Home buyers may also consider a 5/1 adjustable rate mortgage, which provides an average 5 year fixed rate of 2.74 percent. The fixed mortgage rate converts to an adjustable rate after five years.
The National Association of REALTORS ® reported that Pending Home Sales in May rose by +6.70 percent to their highest level in 6 years.
Last week ended on a positive note with the Consumer Sentiment Index for June beating expectations of 83.0 and coming in at 84.1. May’s reading was 82.1; higher consumer confidence is likely driving demand for available homes.
What‘s Ahead This Week
Next week’s scheduled economic news includes Construction Spending due on Monday and the ADP private sector jobs report is set for Wednesday.
Thursday the financial markets are closed as we celebrate the July 4th holiday.
Friday brings the Department of Labor’s Non-farm Payrolls Report and the National Unemployment Rate. If the unemployment rate stays steady at 7.60 percent, this may reduce fears that the Fed will start reducing its monetary easing program any time soon, which should help to slow the recent increases in mortgage rates.
Jun 28, 2013 | Home Financing Tips
Imagine that you’ve found the perfect home and are ready to apply for financing. Your home loan approval amount comes back lower than you would have expected and at an interest rate significantly above what you have heard is available on the market.
This could be because you have an average to poor credit score.
Mortgage lenders base interest rates on many things, but your credit score plays a large part. Anything between 720 and 850 will typically qualify for better interest rates. A mediocre score is usually between 660 and 719, and a low score is 659 and under.
If you have a lower score than you’d like, below are a few traits for you to follow of people who possess higher credit scores and secure the best home financing.
They don’t max out their cards.
It’s better to keep a low revolving balance on a few cards than to spend every dime allotted on one. The ratio of credit card balance to your credit limit is called credit utilization. The higher your credit utilization, the larger affect it can have one your credit score.
They make payments on time.
This is very likely the most important tip for your credit health. If you miss a payment on a term loan, credit card account or monthly home bill, then you could be turned over to collections, which will affect your score negatively. You will almost surely be reported as late to the credit bureaus, which will in turn drop your credit score precipitously. Absolutely make all of your payments before their due date.
They stay with one card.
Don’t close and open credit card accounts frequently. Each time you make a change to your line of credit, it affects your score. Even if you don’t want to be tempted to use a credit card, keep the account open and leave the card at home. According to the Fair Isaac Corporation (FICO), high credit achievers have accounts that are usually at least 11 years old.
Excellent credit could qualify you for a better interest rate, which might save you thousands of dollars over the life of the loan. So stay on top of your monthly credit bills and keep a low balance on just a few cards to watch your score steadily increase.
If you’re ready to learn more about your ability to purchase a Worcester County area home, call your trusted home financing professional today.
Jun 27, 2013 | Home Buyer Tips
You’ve got a new job offer across the country and you are planning to pack your things, buy a home and make the big move.
However, when you tell your 17 year old daughter your plans, she lets out a mournful wail and cries that it is not fair. How can you possibly take her away from all of her friends, her favorite hangout spots and the cute boy she just started seeing?
Moving is a difficult transition and it is often even more traumatic for teenagers. The teenage years are an important stage where young adults establish their individuality and independence and during this time their social circle is extremely important to them.
Being removed from that against their will can make any teen feel sad, confused, angry and resentful. Also, fitting into a new social scene in a different location can be a challenge for a teen that might be singled out as the “new kid”.
How can you help your teen during this transition so that the experience will be easier on them?
5 Tips To Help Your Teen Move More Smoothly
Here are some tips that will make the experience of moving a little bit easier on your teenager:
- Give them as much notice as possible so that they have time to adjust to the idea of moving. They will feel like they have enough time to say goodbye to their friends and close a chapter of their lives.
- Try to schedule the move around the school calendar, as moving in the summer is much less disruptive to your teen’s life than relocating in the middle of the school year.
- Make sure that they have ample time to spend with their close friends before they leave and once you arrive, understand that they might go through a grieving process of missing their old pals.
- When you get to your new home, make sure that your teen has plenty of ways to keep in touch with their old friends, such as an internet connection and a cell phone plan.
- Encourage your teen to get involved in the community of your new hometown, like joining sports clubs or attending events. This can help them to make new friends.
Moving to a new city is always exciting but offers challenges like this one for families. For more advice on moving to a new Worcester County area home, contact your trusted real estate agent today.
Jun 26, 2013 | Housing Analysis
The S&P Case-Shiller Home Price Indices for April indicate that the housing recovery gained ground.
In April 2013 average home prices tracked in the Case-Shiller 10 and 20-city Composites increased by 11.60 and 12.10 percent year-over-year. On a month-to-month basis, the Composites increased by 2.60 and 2.50 percent respectively.
According to David M. Blitzer, Chairman of the S&P Dow Jones Indices’ Index Committee, the 10-and 20- City Composites experienced their largest month- to- month gains since their inception: “Thirteen cities posted month- to-month gains of two percent or more, with San Francisco leading with a month-to-month gain of 4.90 percent.”
The 10-and-20 City Indices reported the highest year-over-year gains in home prices since 2006. Cities where home prices gained more than 20 percent year-over-year included Atlanta, Las Vegas, Phoenix and San Francisco. Phoenix posted its 12th consecutive month of double-digit increases in home prices while San Francisco home prices increased year-over-year by an average of 23.90 percent. Home prices increased year-over-year in 19 the 20 cities included in the 10-and 20 City Composites, with home prices in Detroit remaining flat.
Mortgage Loan Requirements Showing Signs Of Loosening
Mr. Blitzer also noted that according to the most recent Fed Senior Loan Officer Opinion Survey, some lenders are beginning to relax credit requirements for mortgage loans. This good news, along with the availability of adjustable-rate mortgage loans is expected to help with maintaining affordability and providing access to homes for more buyers.
According to the S&P Case-Shiller 10-and-20 City Composites, home prices fell approximately 26 to 27percent from their highest in June 2006 to their lowest in March 2012. As of April 2013, average home prices had recovered by 13.10 percent for the 10-City Composite and 13.60 percent for the 20-City Composite.
More Reports Show Ongoing Housing Recovery
The Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac, reported that home prices increased an average of 7.40 percent year-over-year as of April 2013, and rose by 0.70 percent between March and April 2013. While this data fell short of an expected month-to-month increase of 1.10 percent, Average FHFA home prices were 11.70 percent below their peak in April 2007.
FHFA bases its report on sales of homes financed with mortgages owned or securitized by Fannie Mae and Freddie Mac.
The U.S. Commerce Department reported that sales of new homes reached a five-year high in May, the highest level since July 2008. May sales increased 2.10 percent between April and May 2013 to a seasonally-adjusted annual rate of 476,000 homes. This represents a year-over-year increase of 29 percent from May 2012.
While rising mortgage rates and home prices may slow demand for homes, economists don’t believe that either factor will halt the housing recovery. A good next step is asking your trusted real estate professional about current home values and loan options in and around Worcester County area.
