RIVERSIDE: Six bids received for
two Victorian homes
City will choose from among six proposals to renovate the 1890s McIntyre and Sweatt houses
City will choose from among six proposals to renovate the 1890s McIntyre and Sweatt houses
Easy ways to save on your mortgage
Are you thinking of buying a home or refinancing the one you own, but unsure if you can handle the costs? Well, good news: There may be some relatively easy savings that you’re missing out on.We tracked down five such savings opportunities. Take a look to see if you can catch a much-needed break.
First, let’s define points. This is simply a way for you to “buy” yourself a better interest rate from the lender by giving the lender money up front when you get your mortgage or refinance.
Each point is equal to one percent of the mortgage amount. So, if you borrow $300,000, one point will cost you $3,000.
And what will it get you? Each point you pay will lower your interest rate about an eighth of a percent on a 30-year, fixed-rate mortgage, says Jim Duffy, a senior loan officer with Primary Residential Mortgage, Inc.
But in addition to saving you on the interest rate, that point will save you come tax time. “Points are prepaid interest and may be deductible as home mortgage interest. If you itemize your deductions, you can deduct the interest paid that year for your mortgage,” says Doug Lebda, founder and CEO of LendingTree, an online source for competitive loan offers.
There are some restrictions, such as the home must be your primary residence, and others, which are outlined in the IRS’s Publication 936, a document that outlines the rules for deducting home mortgage interest, says Lebda. But if you’re the average homebuyer, you’ll likely meet the restrictions.
Do you put out fires? Or teach elementary school? Well, you might be entitled to some sweet savings when it comes time to buy a home.
For instance, there are both public and private organizations that offer benefits such as lower fees, better interest rates, less-stringent credit requirements, and more for those serving as firefighters, teachers, police officers, government workers, health care workers, and other professions, says Timothy Manni, the managing editor of HSN.com, an online mortgage resource.
One example is Ohio’s Housing Finance Agency’s Heroes Product, which, among other benefits, offers fire fighters, paramedics, police officers, health care workers, and teachers, interest rates up to a quarter percent lower for first-time buyers.
Another example is Mortgages for Heroes, a private organization that has partnered with local unions to offer similar benefits, including help with less-than-perfect credit, to workers in the same fields as well as municipal employees and veterans.
With such opportunities available, you should make sure you research whether you qualify for special benefits because of your past or present career, says Manni. It could not only help qualify you for a mortgage, but also get you a pretty good deal.
Refinancing to a Lower Interest Rate
If you think the days of refinancing are over because interest rates have inched up, you’re wrong. In fact, rising interest rates could be the very reason you might want to look into refinancing if you already own a home, says Duffy.
Why? Well, most analysts believe that interest rates will rise for the foreseeable future, says Duffy. That means that your ability to lower your interest rate will only lessen or disappear over time if you have a rate higher than today’s average rate, which is 4.10 percent for a 30-year, fixed-rate mortgage as of August 21, 2014 according to Freddie Mac.
Now for the tricky part. How much do you need to lower your rate by to save money? After all, refinancing does come with a cost, usually around 2 to 3 percent of the refinanced amount, says Duffy. He says that if you can lower your interest rate by 1 percent or more, you should definitely look into refinancing.
However, he is quick to add that every situation is different. For instance, if you plan to sell your home within a few years, you may not have time to recoup the cost of refinancing through a lower monthly payment.
Improving Your Credit
If you’re considering applying for a mortgage or refinancing the one you have, your credit rating is a very important factor. It can determine not only whether or not you get a mortgage, but how low your interest rate will be. So the higher credit rating you have, the lower your rate will be, if all other factors are the same.
Here’s a chart from FICO, a commonly used credit rating agency, that illustrates how your credit score could affect the cost of a $300,000 30-year, fixed-rate mortgage.
|FICO Score||APR||Monthly Payment|
The chart illustrates the point that credit plays a huge role in what kind of rate you receive as a borrower. But, Lebda explains, “There are some things consumers can do before shopping around to improve credit scores, like paying down credit card debt [or consolidating] and making payments on time for several months.”
More specifically, if you want to bump up your credit score by as much as 10 points almost overnight, pay down your credit cards to a third of their credit limits, says Ken Lin, CEO of CreditKarma.com, a site where consumers can access their free credit reports.
Here is a simple example of what he means. Say you have two credit cards, each with $5,000 limits and your outstanding balance on each is $2,000. Your total available credit would be $10,000 and your total outstanding balance would be $4,000, or 40 percent of your available credit.
If you paid down your total debt on those cards by $700, bringing your outstanding balance to $3,300, or approximately 33 percent of your available credit, it could raise your credit score. And according to the FICO chart above, that could save you a lot of money over the life of your mortgage.
Comparison shopping is widely considered one of the most effective ways to save money. And the tool relied on to whittle the price of new cars, furniture and services is an effective means to reduce the price of homeowners insurance, too.But comparing insurance companies is only effective if you know how to navigate the sea of information available to you. Here’s how to wade through all the information to get a policy that meets your home insurance needs. It takes nine steps, but you’ll end up with a good answer.
1. Compare statewide costs
Insurance companies are regulated by state. Your first step should be to visit your state’s Department of Insurance website to learn the typical average cost of home insurance in different areas of your state. The site should also provide a rating for each home insurance company licensed to conduct business in your state, as well as any consumer complaints lodged against the insurance company.
These will help you determine which carriers you want to size up and compare against each other.
2. Do a company health check
Investigate home insurance companies you’re considering via ratings on such websites as those of the National Association of Insurance Commissioners, J.D. Power, A.M. Best and Weiss Research. These sites track consumer complaints against the companies as well as general customer feedback, the processing of claims and other data. In some instances, these websites also rate a home insurance company’s financial health to determine whether the company is able to pay out policies in the event you need to file a claim.
3. Consider your specific needs
From its value and contents to location and size, every home is unique. To ensure you find the right coverage for your property, list characteristics and specifics such as jewelry, art and collections you want covered. You’ll also want to note whether the property is a vacation or second home, if it’s located in an area prone to natural disasters, if you have a pool or separate structures such as sheds that you want covered, etc.
“You should also determine what deductible you’re comfortable setting,” says Billy Van Jura, an independent insurance broker in Poughkeepsie, N.Y.
Once you know the type and amount of coverage you’re looking for, you’ll be able to compare potential companies and their rates side by side, says Van Jura. Also note whether you want replacement cost or actual cash value coverage for your property; the first type costs more but protects you better, as it will pay to rebuild, say, your 10-year-old sun porch, with a like-value new one – not reimburse you for what the porch is worth after 10 years of depreciation.
4. Start with what you know
Loyalty can factor into home insurance rates. In many instances, a carrier you’re already doing business with (it insures your auto, boat, etc.) may offer the best home insurance rates because you’re an existing customer. Before collecting quotes from other companies, request a quote from insurers you already use.
5. Get multiple quotes
“Obtaining multiple quotes is important when looking for any type of insurance; however, it is especially important for homeowners insurance since coverage needs can vary so much,” says Eric Stauffer, president, ExpertInsuranceReviews.com. “Comparing several companies will yield the best overall results.”
Aim for a minimum of three companies. Even more might be useful because you’ll learn something more about the industry and the options available in your area from each insurer you consult.
6. Look beyond price
Annual premium is often what drives the choice to purchase a home insurance policy. But don’t look solely at price. “No two insurers use the same policy forms and endorsements, and policy wording can be very different,” says Noah J. Bank, a licensed insurance broker with The B & G Group in Plainview, N.Y. “Even when you think you’re comparing apples to apples, there’s usually more to it, so you need to compare at coverages and limits.”
Be sure you understand what each policy you’re considering truly covers – and what limits or exclusions are attached to it – rather than comparing only price. “Something as simple as septic-tank backup protection could be overlooked on a specific house, and that can greatly impact price if an insurance agent primarily sells policies to people hooked up to city sewers,” says Stauffer.
7. Talk to a real person
Stauffer says the best way to get quotes is to go directly to the insurance companies or speak to an independent agent who deals with multiple companies. “There are websites that can get an aggregate list of prices, but every insurance company will have slightly different questions in order to get the most accurate quotes,” he says.
8. Be independent
Look beyond traditional “captive” insurance agents who work for just one home insurance company. Working with an independent agent or broker who works with multiple insurers lets you compare price, coverage, etc., at multiple companies to see which one works best for you.
“Whether you work with a captive or independent agent, I recommend working with an insurance professional who is interested in understanding your needs,” says Bank. “Your agent should be willing to go to market and narrow down to solutions that are right for you.”
9. Ask plenty of questions
Bank urges consumers to ask questions that give them a detailed sense of their options and what each choice costs. “You want to consider different deductible scenarios to best weigh if it makes sense to opt for a higher deductible and self-insure,” he says.
Also ask for detailed definitions of terms and exclusions; every company has its own, which can affect rates and coverage.
The Bottom Line
Home insurance is as unique as the property it protects. You’ll be surprised what you learn when you comparison shop. It’s the best way to find a policy you can afford that gives you the most protection for your money. To truly compare options – and prevent any unpleasant surprises – be sure to read the entire policy carefully and understand all the fine print before you make your choice.
When a transaction tanks, there’s usually one common culprit to blame: Miscommunication. Too often clients and customers trade in lingo they really don’t understand; and, while you may be telling them the truth, it’s going over their heads and pointing you toward transaction disaster.
In hopes of helping you avoid the derailed deal during this year’s make it or break it market season, here are five terms to go over early to avoid a negative review or, even worst, a deal gone down the drain:
In a dream world there are no surprises on the way to closing. Here on planet Earth anything can change at any time. A frequent stress point where clients get caught in the cross-hairs of the sometimes inevitable is the good faith estimate.
Most clients see and save toward this magic number that tells them what they’ll need to close. However, make sure your buyers are aware that best term to pay attention to is the last. These “estimates” can vary drastically when it comes to closing time and they should probably save with padding in mind to make sure their deal doesn’t fall apart at the end of the road.
A pre-approval is just that, a pre approval. Too often clients think that their pre-approval is as good as money in hand. And yes, it does give them permission to shop, but they need to be aware that changes in their habits or the market can affect their ability to close.
Yes, most people (hopefully) know not to buy a car while shopping for a home, but they may not be thinking about closing the deal fast to avoid getting caught on the downside of lending standard or market value changes. They need you to make it clear that they don’t have the loan until they’ve closed, and that means both being conservative with their credit and time.
On the seller’s side, the most common catch phrase that trips your clients up is the almighty “comp.” A “comp” is one comparable property; and yes, they are helpful when it comes to pricing.
Your clients, however, need to understand the difference between the “comp” and a Comparative Market Analysis (CMA). Your CMA takes into account a number of factors, and if you don’t take the time to explain them properly, your client will lean on sites like Trulia or Google as an authority for pricing advice.
When you recommend a pricing strategy, show clients what road you traveled to get there.
In the mind of many seller clients, the MLS is a magic place where properties go to get sold. You know that a ton more goes into marketing.
To make sure clients don’t misunderstand what a multiple listing service is, show them your entire property marketing plan. This has two major benefits. One, you keep them from sounding like a dunce. Second, you prove your value by showing them all of the resources and tools like Trulia Mobile Ads you use to move their home.
The fact is that most people hire an agent without having a clue as to what agents actually do. If you let your clients get this wrong, you risk both the deal and your reputation.
There’s a lot of conversation around whether or not agents earn their commissions. Showing off things like your marketing plan, positive recommendations and reviews, and other resources that break down what you do in your listing or buyer presentations can go along way.
WASHINGTON (Reuters) – Sales of new U.S. single-family homes surged in August and hit their highest level in more than six years, offering confirmation that the housing recovery remains on course.
The Commerce Department said on Wednesday sales jumped 18.0 percent to a seasonally adjusted annual rate of 504,000 units. That was the highest level since May 2008 and marked the second straight month of gains.
Economists polled by Reuters had forecast new home sales rising to only a 430,000-unit pace last month.
While the new home sales segment accounts for only 9.1 percent of the housing market, the increase last month should allay fears of renewed housing weakness after a surprise decline in home resales last month.
Existing home sales fell in August for the first-time in four months as investors, who have been supporting the market, stepped away. Some economists, however, think the departure of investors, who have been bidding up prices, is a positive development for housing.
A survey last week showed homebuilder sentiment hit its highest level in nearly nine years in September, with builders reporting a sharp pick-up in buyer traffic.
But housing continues to be hobbled by relatively high unemployment and sluggish wage growth.
In a separate report, the Mortgage Bankers Association said mortgage applications fell last week. The decline, however, followed a jump in the week ending Sept. 12.
U.S. financial markets were little moved by the data, but housing shares tumbled after home builder KB Home reported earnings that missed Wall Street’s expectations.
KB HOME shares fell 6.89 percent, while Pulte Group slipped 1.74 percent. Toll Brother dropped 1.27 percent.
In August, new home sales soared 50 percent in the West to their highest level since January 2008.
Sales in the populous South increased 7.8 percent to a 10-month high. In the Northeast, sales rose 29.2 percent, but were flat in the Midwest.
Despite the rise in sales, the stock of new houses on the market hit its highest level in four years, giving buyers more choice. At August’s sales pace it would take 4.8 months to clear the supply of houses on the market. That compared to 5.6 months in July.
Six months’ supply is normally considered a healthy balance between supply and demand. The median new house price increased 8.0 percent in the 12 months to August.
Investors who have been burning through big bankrolls of cash to buy up U.S. homes pulled away from the housing market last month — but that could spell opportunity for other buyers, the National Association of Realtors said Monday.
The real estate trade group said the retreat by cash investors is a big reason why, after four straight months of gains, sales of existing homes took a disappointing slide in August, dropping 1.8 percent to a seasonally adjusted annual rate of 5.05 million. Individual investors accounted for 12 percent of sales of existing homes in August, down from 16 percent the month before and 17 percent a year earlier.
“This means that investors bought 26.3 percent fewer homes last month,” IHS Global Insight economist Stephanie Karol pointed out in an email to clients.
All cash sales fell from 29 percent in July to 23 percent in August, the second consecutive monthly drop. That left cash deals at their lowest share of overall sales since December 2009.
Overall sales activity still remains stronger than it had been earlier in the year, but August sales gains in the Northeast and Midwest were more than offset by weakness in other regions, according to the Realtors report. “Losses were concentrated in the West and South, where investors had been playing an outsized role in supporting sales,” Diane Swonk of Mesirow Financial noted in a blog post.
Investors scooping up properties in all cash deals, including lots of homes in foreclosure, have been boosting the home price recovery, but the National Association of Relators said a pullback by investors could actually be good for the housing market. “On the positive side, first-time buyers have a better chance of purchasing a home now that bidding wars are receding and supply constraints have significantly eased in many parts of the country,” said Lawrence Yun, chief economist for the trade association. “As long as solid job growth continues, wages should eventually pick up to steadily improve purchasing power and help fully release the pent-up demand for buying.”
For now, though, the drop off in interest from investors has yet to be made up in new activity from first-time homebuyers. “Families are picking up the pace, but not quickly enough to keep the headline figure expanding,” said IHS’s Karol. Sales to families grew by nearly 3 percent since July and by 0.5 percent over the previous August, marking the first year-over-year growth since October 2013.
Still, tight lending standards and stagnant wages are still keeping would-be homebuyers on the sidelines. “We think home sales are running out of steam now that the post-winter rebound is over and the buyers for distressed properties fade away,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote to clients (see his chart below). “The implied level of distressed sales has halved since last summer, but tight mortgage lending standards mean that regular non-distressed buyers cannot fill the gap in the near-term.”
Many millennials, struggling with large amounts of student debt and a job market that has only recently shown stronger momentum, are still not in the market and the formation of new households has still not rebounded strongly enough to drive stronger sales numbers. According to new Census Bureau data, about 500,000 new households were formed between the first quarter of 2013 and the first quarter of 2014 — “far below expectations,” Karol notes. The number of households headed by a millennial grew by just 1,000.
At the same time, Karol writes, the average household size grew a bit over the course of 2013, “supporting the conclusion that household formation is down because more Americans are ‘doubling up’. If this is the case, it implies higher demand for larger homes, but should result in a smaller number of overall sales.”
Overall, the median home sold in August went for $219,800, representing a relatively modest a 4.8 percent increase over a year earlier. The unsold inventory of homes was 4.5 percent higher than it had been in August 2013. Those slower gains in home prices could really be healthy for the housing market, but only if new buyers have a chance to get in the game. That remains in question.
“There is some hope first-time buyers will come back with recent increases to employment and some modifications of student loans,” Swonk wrote. “Those hopes look a bit premature, however, given ongoing constraints on wages combined with the paperwork required for borrowers to modify student loans to make them more affordable.”