Stuart Florida Real Estate » First Time Home Buyer

Question of the Day: Should I lock in my mortgage rate?

Eric Slifkin — Mon, 14 May 2012 02:21:09 +0000

Q: Should I lock in my mortgage rate?

A: Because the interest rate market fluctuates constantly and is subject to quick movements without notice, locking in a mortgage rate with a lender certainly protects you from the time your lock is confirmed to the day it expires.

Lock-ins make sense in a rapidly-rising rate environment or when borrowers expect rates to climb during the next 30 – 60 days, which is typically the amount of time a lock-in remains in effect.

A lock-in given at the time of application is useful because it may take the lender several weeks to prepare a loan application. These days, however, automated loan practices have cut the time quite a bit.

Lock-ins are not necessarily free. Some lenders require you to pay a lock-in fee to guarantee both the rate and the terms.

If your lock-in expires before you close on the loan, most lenders will base the loan rate on current market interest rates and points.

This post has been authored by Eric Slifkin, REALTOR® serving South Florida’s Treasure Coast. You can reach me at 888-288-1765, or visit my Web site. As your resource for information on new or resale homes throughout the Treasure Coast, please be sure to contact me about any home you may find on the Web, yard sign or ad and I will research the property, arrange showings and handle all the details.

Working with a Realtor: Top Ten Home Buyer Expectations

Eric Slifkin — Sat, 07 Apr 2012 15:14:03 +0000

What should you expect from a buyer’s agent? Having served hundreds of buyers over my decade in Stuart, Florida real estate, I have found that most buyers share the same expectations when it comes to working with an agent. Here is what I have found to be most important to home buyers when working with a Realtor:

Help with finding the best home for them.
Help them understand the home-buying process
Provide geographic knowledge of surrounding home search areas
Show them all homes available within their price range and search criteria.
Point out unobserved features or faults with a property.
Help to negotiate the best possible price and terms of the sale.
Provide estimate of closing costs
Manage the paperwork flow.
Furnish a list of service providers.
Help resolve mortgage, inspection, and other pre-closing issues.

These are but a few of the many issues and concerns facing home buyers in today’s market. Please feel free to add your own wants and needs in the comments section below.

Top 10 Homeowner Financing Tips

Eric Slifkin — Mon, 05 Mar 2012 10:44:46 +0000

Top 10 Homeowner Financing Tips
Here are 10 great tips to consider when getting a mortgage.

1. Don’t Stretch Your Loan Qualification Limits to Buy a Home Beyond Your Budget. A home should be a source of satisfaction and an investment not a financial albatross, especially for first-time buyers. Borrowing heavily from family members, selling assets, and living poor just to own a bigger or better home, makes for larger mortgage payments and risks difficulties in the future.

2. Always Shop for Competitive Rates, Points, and Fees. Get at least three bids. The most competitive lender one week may not be next week so get (or reconfirm) quotes the same week you are ready to make the commitment.

3. Get An Immediate Written Confirmation of Your Locked-in Interest Rate and Interest Rate Terms. You might find some discrepancies with the figures used on the final loan documents.

4. Don’t Agree to Prepayment Penalties. You may want to refinance or partially prepay part of the mortgage. If there is no mention of prepayment penalties, make sure you have an addendum attached to the mortgage specifying that no fees will be imposed.

5. Understanding All the Conditions of Your Loan: You or a professional that you trust should thoroughly scrutinize each document. Ask questions if you aren’t sure what something means.

6. Pick the Right Kind of Loan. Rates are higher on 30 year loans than on comparable 15 year loans. That’s because there is a greater risk that rates will go up the longer the lender commits to a fixed rate. Lenders hate holding loans at below market rates. While there is an advantage to the predictability of fixed rates, if you expect to be transferred in 5 years, you’ll be paying more than you need for a 30 year fixed rate loan. If you want both the security of predictable payments and the lowest monthly payment consider “hybrid” loans – those with a fixed rate for the first five or seven years of their 30 year duration. If you are going to be there for a shorter period, or have confidence that rates will be dropping further, consider an adjustable rate mortgage.

7. If You Are Buying Rather Than Refinancing, Consider Getting a Pre-approved Mortgage or Contingent Loan Approval Letter. The former is a binding commitment for a loan up to a certain amount. It can substantially strengthen your negotiating position with the seller, but it puts pressure on you to close a deal before the loan commitment expires. A contingent approval is a letter from a lender that states the largest loan you would qualify for, subject to confirmation of the financial information you’ve provided and formal approval. It will also give you additional negotiating leverage without binding you to the lender (or vice versa). Sometimes owner financing can work to both parties advantage. Ask the seller if it’s a possibility. If so explore further to see if there might be mutually agreeable terms before making an offer.

8. Save Everything. Lenders require and provide numerous documents. Some get misplaced, usually at the most critical time. Keep copies of everything you send the lender and everything the lender sends you.

9. Take Advantage of the Deduction. The mortgage interest deduction is one of the few remaining tax deductible interest payments, and it’s also the cheapest form of long term financing. Consider financing/refinancing as an alternative source of funds for home improvements or other constructive long term investments like education. Don’t get in over your head, and never use it to finance your summer vacation or other short term pleasures.

10. Study! A lot of money is at stake. You can’t learn too much, and you won’t have time to learn what you need, interview and select a lender in the five days allowed most buyers to apply for a loan. Read the real estate section of your local paper and books on the subject.

Courtesy of the American Homeowners Foundation and the American Homeowners Grassroots Alliance, www.AmericanHomeowners

Real Estate FAQ

Eric Slifkin — Wed, 22 Feb 2012 20:47:56 +0000

Question of the Day

Q: What are some important things to remember about closing day?

A: There are several. The following to-do list can help save you a few headaches and keep the closing on track:
• Keep extra money in your account. Something unexpected can pop up during the closing that will require more money out of your pocket. Take your checkbook. Even better, find out how much you will need to pay and write a certified check for the total amount.

• Take your loan commitment letter. Use it to verify loan approval in case of a mistake or misunderstanding with the lender.
• Take your contract to purchase. Pull it out if something a little suspicious comes up.
• Take your personal ID. A driver’s license or other personal identification will due.
• Do a before-closing inspection. It is always a good idea, when possible, to walk through the property to make a list of any problems.
• Utilities. Arrange in advance to have the water and electric meters read on closing day and the service switched to your name to prevent interrupted service. The same applies for the fuel tank.

Saving Toward a Down Payment: 8 Great Ideas

Eric Slifkin — Sun, 05 Feb 2012 12:38:20 +0000

Saving Toward a Down Payment: 8 Great Ideas

By Barbara Pronin, RISMedia Columnist
Like many consumers today, you may be thinking this is a great time to buy your first home—and you are right. Rock bottom prices, historically low mortgage rates, and a great selection of properties in all price ranges make this an excellent time to buy.

“The problem for many,” noted consumer finance consultant Elizabeth Ray, “is the lack of a down payment. But favorable price and mortgage conditions will likely last for a while. The smart and hopeful first-time buyer will take advantage of the opportunity to save now for that needed down payment.”

For those willing to make a few sacrifices in the short-term, Ray suggests eight possible ways to help consumers watch their savings pile up more quickly:

• Bank the extras – Anytime you get a refund, bonus, commission or birthday check, bank it in a separate savings account.
• Live on one income – Working couples should try to live on one income and bank the other—or half of it.
• Get a roommate – If single and living on your own, think about halving your monthly costs by taking in a roommate.
• Ditch the second car – If possible, use public transportation and bank the sale funds or payments.
• Do without extras – Can you do without cable? Eating out every night? That Starbucks stop every morning?
• Pay off debt – As you pay off high interest debt to better your credit rating, you will also be saving that high interest spend. Try to bank the payments you no longer need to make.
• Ask about a piggyback mortgage – Consult with a mortgage broker. If you can’t quite get the required percentage together for your down payment, but have a high enough monthly income, you may be able to get a piggybank loan to cover what your first mortgage won’t.
• Check out loan assistance programs – Government organizations like Veterans Affairs and FHA offer special programs designed to help people who don’t have large down payments obtain mortgage financing. Also check with state and local housing authorities to find out what assistance they may offer.

Adjustable Mortgage Rates Hit Record Lows

Eric Slifkin — Wed, 14 Dec 2011 00:31:50 +0000

Freddie Mac (OTC: FMCC) recently released the results of its Primary Mortgage Market Survey® (PMMS®), showing average fixed mortgage rates changing little and remaining near their historic lows while adjustable-rate mortgages averaged new record lows. The 30-year fixed has averaged at or below 4 percent for the fourth consecutive week.

The 30-year fixed-rate mortgage (FRM) averaged 3.98 percent with an average 0.7 point for the week ending November 23, 2011, down from last week when it averaged 4.00 percent. Last year at this time, the 30-year FRM averaged 4.40 percent.

The survey showed that the 15-year FRM this week averaged 3.30 percent with an average 0.7 point, down from last week when it averaged 3.31 percent. A year ago at this time, the 15-year FRM averaged 3.77 percent.

Additionally, the 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.91 percent this week, with an average 0.6 point, down from last week when it averaged 2.97 percent. A year ago, the 5-year ARM averaged 3.45 percent.

The one-year Treasury-indexed ARM averaged 2.79 percent this week with an average 0.6 point, down from last week when it averaged 2.98 percent. At this time last year, the 1-year ARM averaged 3.23 percent.

“Mortgage rates eased slightly this week with fixed-rate loans hovering above all-time lows and ARMs reaching a new nadir,” says Frank Nothaft, vice president and chief economist for Freddie Mac. “The high-degree of home-buyer affordability in recent months translated into a 1.4 percent pickup in existing home sales during October, according to the National Association of REALTORS® (NAR). NAR also reported that contract cancellations were up in October as well, which restrained sales from achieving a stronger rebound.”

For more information, visit www.freddiemac.com.

Home Buying Tips: Buying Your First Home

Eric Slifkin — Sun, 27 Nov 2011 05:45:48 +0000

When it comes to buying your first home (or move-up home), there is nothing easy about the process. You have to be prepared to go through every step of the entire transaction, which can be daunting.

Buying a home is not something that will happen over night, but with assistance from your real estate professional it can be a great experience that will achieve your goal of home ownership.

It will take effort and preparation to get to the closing table. You have to make sure that you have all of your finances in order and that your credit is sufficient to ensure you get a decent interest rate when applying for a mortgage.

Learn more: Get a Mortgage Preapproval

Do your research and get all the facts and information that you need about buying a home. You can go online and find many great resources and tips to improve your finances and get your home financed for less than what you may expect.

Free Ebook: Your First Home: The Proven Path to Home Ownership

Make sure that you are looking at a variety of homes and not go with the first one that you see. Checking out as many homes as possible will also give you a good idea of what is available in your price range. You will know it when you have found the right home that will be perfect for you- most people get a gut feeling that they have found their dream home the minute that they walk into it.

Buying a home takes a team to make it happen. You may want to have the help of a real estate professional to get you started. A Realtor can help you locate different homes so that you can find the one that you love. He or she can help you find a lender, home inspector and closing (title) company to facilitate your transaction. If you choose to go it alone, there are many different individuals and companies to choose from so you have to make sure that you are taking the time to find people and companies that you are comfortable with. You need to be able to trust these people so that you get to settlement with as little stress as possible.

Learn more: Frequently Asked Questions in Real Estate

Acquiring your first home requires patience and persistence. You have to be able to make sure that you have all the tools and resources necessary to make a good buying decision and are happy with the end result.

Florida’s Existing Home, Condo Sales Rising

Eric Slifkin — Thu, 10 Nov 2011 08:18:30 +0000

Now may be the time for Florida second home or retirement home buyers to get serious. With strong demand and wavering prices, the best units are going under contract quickly.

This trend became evident recently while showing beachfront condos to an out of town couple. Having seen a dozen properties over a three day span, we scheduled second showings of three waterfront units only to find they had all gone under contract. Two were priced at half what they would have sold for five years ago and the third was even less with a dock! All were furnished and updated. The couple returned home disappointed they had missed out on these properties and unable to purchase a home in time for the winter season.

While less desirable properties still languish, the market for well-maintained homes in good locations appears to be heating up. Buyers in this niche are now less inclined to move onto another property if all their demands are not met, thwarting more discerning buyers’ attempts to find a dream home at a bargain basement price. Read Market Report

Your First Home – Free Download

Eric Slifkin — Sun, 06 Nov 2011 14:40:32 +0000

Download this new addition to our Keller Williams Realty Book series titled Your First Home: The Proven Path to Home Ownership.

It takes a step-by-step approach on educating first time homebuyers on items related to home ownership; including financing, home search tips, making offers, home inspections and other important detials of buying a first home.

Free download – click here

5 Factors That Decide Your Credit Score

Eric Slifkin — Tue, 11 Oct 2011 10:03:29 +0000

5 Factors That Decide Your Credit Score

Credit scores range between 200 and 800, with scores above 620 considered desirable for obtaining a mortgage. The following factors affect your score:

1. Your payment history. Did you pay your credit card obligations on time? If they were late, then how late? Bankruptcy filing, liens, and collection activity also impact your history.
2. How much you owe. If you owe a great deal of money on numerous accounts, it can indicate that you are overextended. However, it’s a good thing if you have a good proportion of balances to total credit limits.

3. The length of your credit history. In general, the longer you have had accounts opened, the better. The average consumer’s oldest obligation is 14 years old, indicating that he or she has been managing credit for some time, according to Fair Isaac Corp., and only one in 20 consumers have credit histories shorter than 2 years.
4. How much new credit you have. New credit, either installment payments or new credit cards, are considered more risky, even if you pay them promptly.

5. The types of credit you use. Generally, it’s desirable to have more than one type of credit — installment loans, credit cards, and a mortgage, for example.

For more on evaluating and understanding your credit score, visit www.myfico.com

Reprinted from REALTOR® magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS®.