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“Of all the decisions you’ll face when buying or selling a home, there is none more important than the person and company you choose to represent you. My focus is to make the process of buying and selling your home as efficient and stress-free as possible.” Originally from New Jersey, my husband, two daughters and Read More…
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When to Refinance Again
Those who refinanced their mortgage a year or so ago, when interest rates averaged just below 5% for a 30-year fixed-rate loan, may be wondering whether it is time to refinance yet again now that rates are at least a full percentage point lower.
- As of Thursday, according to Freddie Mac’s weekly survey, the average rate on a 30-year loan was 3.83%, down from 4.63% a year ago, setting a record low.
- According to financial planners, homeowners considering refinancing first should delve into their financial goals, specifically the length of time they plan to live in the home.
- Some homeowners decide it makes more sense to stay with their current mortgage, especially if the savings are small or they plan to move within a year or two. According to one financial planner, when homeowners refinance, they are not building equity; they are starting at the beginning of the amortization tables.
- Amortization schedules work like this: in the first few years, almost all of the payment goes toward interest, so the longer the homeowner has the loan, the more is put toward the principal.
- Those who refinanced in the last year or two don’t have to consider amortization tables, but they do need to know their equity position — and when refinancing would begin to pay off.
- To calculate that, start with a rundown of all the closing costs, then divide the closing costs by the amount expected to be saved on each monthly payment.
- Depending on the lender, most homeowners likely need to have at least 20% equity, and maybe a little more, if they want to wrap closing costs into the new mortgage.
Read the full story at http://on.car.org/KJfCDd
Locking in Peace of Mind
Mortgage rates are near historic lows, but they are rising, leading some borrowers to consider locking in their rate. When borrowers lock in their interest rate, it freezes the terms of the loan while it is being processed, potentially saving borrowers thousands of dollars over the life of the mortgage.
- Locking in a rate may be especially important for those who are refinancing, where even a quarter of a percentage point could skew a borrower’s calculations and make a refinancing less financially desirable.
- Rate locks can provide buyers with some peace of mind, not to mention one less thing to think about in an otherwise onerous application process.
- Lenders typically will give loan rate guarantee agreements when a borrower has a purchase agreement, but a few will provide them to those who are preapproved for a mortgage.
- The cost of reserving an interest rate depends both on the duration of the lock and the amount of the loan. The longer the lock, the more costly it is. Most locks are for 30, 45, or 60 days, but some lenders will go as long as six months.
- Most lenders offer some version of a free look, though it may be only for 30 days. Others charge points – or fractions thereof – based on the loan size, which could amount to several hundred dollars. One point is equal to 1% of the loan amount. Sometimes these charges are refundable at closing.
- Borrowers may want to skip a rate lock, or delay taking one, if they are unsure when their home purchase will close.
- Knowing how long to lock in a rate requires a clear picture of the mortgage process, and a good estimate from the lender on how long it will take to approve the loan and complete all the paperwork and other requirements. For some lenders handling refinancing, this can be 15 or 20 days; others take longer.
Read the full story at http://on.car.org/HEfwcU
California Home Prices Down Due to Distressed Properties
California home sales declined from both the prior month & year in January, according to data from the California Association of Realtors (C.A.R.). The median price also was lower, primarily due to a sales increase in the distressed market.
Making sense of the story:
- Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 517,740 in January, according to information collected by C.A.R. from more than 90 local REALTOR associations and MLSs statewide.
- January’s sales were down 0.6% from December’s 520,940 pace and down 5.7% from the revised 548,760 sales pace recorded in January 2011. The statewide sales figure represents what would be the total number of homes sold during 2012 if sales maintained the January pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.
- The statewide median price of an existing, single family detached home fell to $268,280 in January, down 6.7% from $285,920 in December. The median price also dropped 3.9% from the revised $279,220 median price recorded in January 2011.
- “The decline in the January median home price is largely a reflection of an increase in the share of distressed home sales”, said C.A.R. Vice President & Chief Economist Leslie Appleton-Young. “Seasonal factors in the non-distressed market also played a role in the softening of the median home price, as prices typically decline in the non-peak home buying season.”
- California’s housing inventory rose in January, with the unsold inventory index for existing, single-family detached homes increasing to 5.5 months in January, up from 4.1 months in December but down from the 6.8-month supply in January 2011. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.
Read the full story at: http://bit.ly/z4ASZ6