Marin County Real Estate BlogRecently posted or modified blog posts in the category - Home Financehttps://www.marincounty.com/blog/Copyright MarinCounty.com2023-09-13T11:52:03-07:00tag:marincounty.com,2012-09-20:30214Should Baby Boomers Buy or Rent After Selling Their Houses?<img src="https://files.keepingcurrentmatters.com/content/images/20230912/20230913-Should-Baby-Boomers-Buy-or-Rent-After-Selling-Their-Houses.png" alt="" class="img-thumbnail mx-auto d-block" />
Are you a baby boomer who’s lived in your current house for a long time and you’re ready for a change? If you’re thinking about <a href="https://www.mykcm.com/2023/09/04/why-its-still-a-sellers-market-today/" rel="noopener noreferrer" target="_blank">selling your house</a>, you have a lot to consider. Will you move to a different state or stay nearby? Is it time to <a href="https://www.mykcm.com/2023/09/07/get-ready-for-smaller-more-affordable-homes/" rel="noopener noreferrer" target="_blank">downsize</a> or do you want more space to accommodate your loved ones? But maybe the biggest consideration boils down to this – will you buy your next home or choose to rent instead?
That decision ultimately depends on your current situation and your future plans. Here are two important factors to help you decide what’s right for you.
Expect Rents to Keep Going Up
The graph below uses <a href="https://www.census.gov/housing/hvs/files/currenthvspress.pdf" rel="noopener noreferrer" target="_blank">data</a> from the Census to show how rents have been climbing steadily since 1988:<a href="https://www.mykcm.com/content/images/20230912/20230913-Median-Asking-Rent-Since-1988.png" rel="noopener noreferrer" target="_blank"><img src="https://files.keepingcurrentmatters.com/content/images/20230912/20230913-Median-Asking-Rent-Since-1988.png" /></a>Rents have been going up consistently over the long run. If you choose to rent, there’s a risk your rental payment will go up each time you renew your lease. Having a higher rental expense may not be something you want to deal with every year.
When you buy a home with a fixed-rate mortgage, it helps stabilize your monthly housing payment. This allows you to lock in your monthly payment for the duration of your home loan. That keeps your payments steady and predictable for the long haul. Freddie Mac <a href="https://myhome.freddiemac.com/blog/homebuying/should-inflation-change-your-homebuying-plans" rel="noopener noreferrer" target="_blank">sums</a> it up like this:
“. . . homeowners with fixed-rate loans will see little to no change to their monthly housing cost over the life of their loan. You can be confident in knowing that your mortgage payments won’t change much in the long term, even when life’s other costs do.”
Owning Your Home Comes with Unique Benefits
<a href="https://www.aarp.org/brandamp/anywhere-buy-instead-of-rent.html" rel="noopener noreferrer" target="_blank">According</a> to AARP, buying your next home is a better long-term strategy than renting:
“Though each option has pros and cons, buying provides more pros, with a broader range of benefits.”
To help you choose what you’ll do after you sell, here are just a few of the benefits of homeownership that article covers:
Owning your home can help you <a href="https://www.mykcm.com/2023/08/15/equity-is-a-game-changer-for-homeowners-looking-to-sell/" rel="noopener noreferrer" target="_blank">save money</a> for the future. Your home, and the <a href="https://www.mykcm.com/2023/09/11/planning-to-retire-your-equity-can-help-you-make-a-move/" rel="noopener noreferrer" target="_blank">equity</a> you build as a homeowner, can provide generational wealth that could be passed on to loved ones, giving them a better life.
You might not have to pay a monthly mortgage payment at all. If you have enough equity to <a href="https://www.mykcm.com/2023/09/01/homeowners-have-a-lot-of-equity-right-now-infographic/" rel="noopener noreferrer" target="_blank">buy</a> your next home outright, you wouldn’t have a monthly mortgage payment. While you might still need to cover property taxes or maintenance fees, not having to worry about a monthly mortgage payment could be a big relief.
Aging in place can be simpler. If your needs change, owning your home gives you the freedom to make renovations and updates that can make everyday life easier.
Bottom Line
If you're a baby boomer who’s wondering whether you should buy or rent your next home, let’s <a href="https://www.mykcm.com/2023/08/23/why-you-need-a-true-expert-in-todays-housing-market/" rel="noopener noreferrer" target="_blank">connect</a>. With rents going up and homeownership providing so many benefits, it may make sense to consider buying your next home.
Contact the Marin Modern Team, your <a href="http://www.marincounty.com/" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable" data-ogsc="">Marin County real estate</a> connection, for assistance buying or selling a home in Marin County California.
2023-09-13T11:40:11-07:002023-09-13T11:52:03-07:00Marin Modern Teamtag:marincounty.com,2012-09-20:27582Why Buying or Selling a Home Helps the Economy and Your Community<img src="https://files.keepingcurrentmatters.com/content/images/20230614/20230615-why-buying-or-selling-a-home-helps-the-economy-and-your-community.jpg" alt="" class="img-thumbnail mx-auto d-block" />
If you're thinking about <a href="https://www.mykcm.com/2023/06/06/real-estate-is-still-considered-the-best-long-term-investment-1/" rel="noopener noreferrer" target="_blank" style="color: blue;">buying</a> or <a href="https://www.mykcm.com/2023/05/26/moving-now-can-give-your-house-its-day-in-the-sun-infographic/" rel="noopener noreferrer" target="_blank" style="color: blue;">selling</a> a house, it's important to know that it doesn't just affect your life, but also your community.
The National Association of Realtors (NAR) releases a <a href="https://cdn.nar.realtor/sites/default/files/documents/2023-state-by-state-economic-impact-of-real-estate-activity-report-us-05-01-2023.pdf?_gl=1*13hskvj*_gcl_au*NTQ4NDc1ODEzLjE2Nzg5MTgyNzk" rel="noopener noreferrer" target="_blank" style="color: blue;">report</a> every year to show how much economic activity is generated by <a href="https://www.mykcm.com/2023/05/25/the-benefits-of-selling-now-according-to-experts/" rel="noopener noreferrer" target="_blank" style="color: blue;">home sales</a>. The chart below illustrates that impact:
<a href="https://www.mykcm.com/content/images/20230614/20230615-economic-impact-of-a-typical-home-sale.png" rel="noopener noreferrer" target="_blank"><img src="https://files.keepingcurrentmatters.com/content/images/20230614/20230615-economic-impact-of-a-typical-home-sale.png" /></a>
As the visual shows, when a house is sold, it can make a big difference in the local economy. The impact comes largely from the workers required to build, update, and buy and sell homes. Robert Dietz, Chief Economist at the National Association of Home Builders (NAHB), <a href="https://chicagoagentmagazine.com/2023/01/02/nahb-robert-dietz-new-construction/" rel="noopener noreferrer" target="_blank" style="color: blue;">explains</a> how the housing industry <a href="https://www.mykcm.com/2023/05/18/powerful-job-market-fuels-homebuyer-demand/" rel="noopener noreferrer" target="_blank" style="color: blue;">adds jobs</a> to a community:
“The economic impact means housing is a significant job creator. In fact, for every single-family home built, enough economic activity is generated to sustain three full-time jobs for a year, per NAHB research. . . . And one job for every $100,000 in remodeling spending.”
Housing being a major job creator makes sense when you consider there are many different industries involved in the process. A recent article from Fortune <a href="https://fortune.com/2022/08/09/real-estate-housing-market-falling-prices-economic-risk/" rel="noopener noreferrer" target="_blank" style="color: blue;">notes</a> housing activity could have a more robust impact than you think due to the many ways it’s tied to the economy:
“Housing has three direct linkages to economic activity (GDP): the construction of new homes, the remodeling of existing homes, and that of housing transactions. . . . consider the activity associated with home sales – think broker fees, lawyers, etc. – which are a sizable contributor to housing’s GDP footprint.”
When you <a href="https://www.mykcm.com/2023/05/24/owning-a-home-helps-protect-against-inflation/" rel="noopener noreferrer" target="_blank" style="color: blue;">buy</a> or sell a home, you work with a <a href="https://www.mykcm.com/2023/05/22/why-buyers-need-an-expert-agent-by-their-side/" rel="noopener noreferrer" target="_blank" style="color: blue;">team of professionals</a>, including contractors, specialists, lawyers, and city officials. Each person plays a role in making the transaction happen.
So, when you <a href="https://www.mykcm.com/2023/06/13/your-needs-matter-more-than-todays-mortgage-rates/" rel="noopener noreferrer" target="_blank" style="color: blue;">make a move</a> in the housing market, you're not just <a href="https://www.mykcm.com/2023/05/23/why-buying-a-vacation-home-beats-renting-one-this-summer/" rel="noopener noreferrer" target="_blank" style="color: blue;">meeting</a> your own needs, you're also making a positive impact on the community. Knowing this can give you a sense of empowerment as you make your decision this year.
Bottom Line
Each and every home sale is important for the local economy. If you’re ready to <a href="https://www.mykcm.com/2023/06/01/the-true-value-of-homeownership/" rel="noopener noreferrer" target="_blank" style="color: blue;">move</a>, let’s connect. It won’t just change your life – it’ll also have a strong positive effect on the whole community.
Contact the Marin Modern Team, your <a href="http://www.marincounty.com/" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable" data-ogsc="" data-linkindex="14">Marin County real estate</a> connection, for assistance buying or selling a home in Marin County California.
2023-06-15T14:02:07-07:002023-06-15T14:05:45-07:00Marin Modern Teamtag:marincounty.com,2012-09-20:21476Experts Increase 2022 Home Price Projections<img data-imagetype="External" src="https://files.mykcm.com/2022/08/16093014/20220817-KCM-Share-600x328.jpg" class="x_webfeedsFeaturedVisual x_wp-post-image" alt="Experts Increase 2022 Home
Price Projections | MyKCM" data-unique-identifier="" style="display: block; margin-bottom: 5px; clear: both; max-width: 100%;" width="600" height="328" />
If you're wondering if home prices are going to come down due to the cooldown in the housing market or a potential recession, here's what you need to know. Not only are experts forecasting home prices will continue to appreciate nationwide this year, but most of them also actually increased their projections for home price appreciation from their original 2022 forecasts (shown in green in the chart below):
<img data-imagetype="External" src="https://files.mykcm.com/2022/08/16162453/20220817-MEM-Eng-.png" class="x_aligncenter x_wp-image-104054" alt="Experts Increase 2022 Home Price Projections | MyKCM" data-unique-identifier="" width="600" height="450" />As the chart shows, most sources adjusted up, and now call for more appreciation in 2022 than they originally projected this January. But why are experts so confident the housing market will see ongoing appreciation? It's because of supply and demand in most markets. As Bankrate says:
After all, supplies of homes for sale remain near record lows. And while a jump in mortgage rates has dampened demand somewhat, demand still outpaces supply, thanks to a combination of little new construction and strong household formation by large numbers of millennials.
Knowing that experts forecast home prices will continue to appreciate in most markets and that they've actually increased their original projections for this year should help you answer the question: will home prices fall? According to the latest forecasts, experts are confident prices will continue to appreciate this year, although at a more moderate rate than they did in 2021.
Bottom Line
If you're worried home prices are going to decline, rest assured many experts raised their forecasts to say they'll continue to appreciate in most markets this year. If you have questions about what's happening with home prices in our local area, let’s connect.
Contact the Marin Modern Team, your <a href="http://www.marincounty.com/" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable" data-linkindex="14" data-ogsc="">Marin County real estate</a> connection, for assistance buying or selling a home in Marin County California.2022-08-17T09:00:00-07:002022-08-17T12:10:09-07:00Marin Modern Teamtag:marincounty.com,2012-09-20:18824Where Are Mortgage Rates Headed?<img data-imagetype="External" src="https://files.mykcm.com/2022/04/12115333/20220413-KCM-Share-600x328.jpg" id="x__x0000_i1037" alt="Where Are Mortgage Rates
Headed? | MyKCM" style="width: 6.25in; height: 3.4166in;" width="600" height="328" border="0" />
There's never been a truer statement regarding forecasting mortgage rates than the one offered last year by <a href="https://blog.firstam.com/economics/reconomy-podcast-2021-housing-market-outlook" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable" data-linkindex="9" data-ogsc="">Mark Fleming</a>, Chief Economist at First American:
You know, the fallacy of economic forecasting is: Don’t ever try and forecast interest rates and or, more specifically, if you’re a real estate economist mortgage rates, because you will always invariably be wrong.
Coming into this year, most experts projected mortgage rates would <a href="https://www.mykcm.com/2021/11/03/experts-project-mortgage-rates-will-continue-to-rise-in-2022/" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable" data-linkindex="10" data-ogsc="">gradually increase</a> and end 2022 in the high three-percent range. It's only April, and rates have already blown past those numbers. Freddie Mac <a href="https://www.freddiemac.com/pmms/archive" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable" data-linkindex="11" data-ogsc="">announced</a> last week that the 30-year fixed-rate mortgage is already at 4.72%.
Danielle Hale, Chief Economist at realtor.com, <a href="https://twitter.com/RDC_Economics/status/1509534325234098179" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable" data-linkindex="12" data-ogsc="">tweeted on March 31</a>:
Continuing on the recent trajectory, would have mortgage rates hitting 5% within a matter of weeks. . . .
Just five days later, on April 5, the Mortgage News Daily <a href="https://www.mortgagenewsdaily.com/mortgage-rates/30-year-fixed" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable" data-linkindex="13" data-ogsc="">quoted</a> a rate of 5.02%.
No one knows how swiftly mortgage rates will rise moving forward. However, at least to this point, they haven't significantly impacted purchaser demand. Ali Wolf, Chief Economist at Zonda, <a href="https://www.builderonline.com/data-analysis/mortgage-rates-continue-climbing-while-applications-decrease-in-latest-weekly-surveys_o" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable" data-linkindex="14" data-ogsc="">explains</a>:
Mortgage rates jumped much quicker and much higher than even the most aggressive forecasts called for at the end of last year, and yet housing demand appears to be holding steady.
Through February, <a href="https://www.corelogic.com/intelligence/find-stories/record-home-price-appreciation-led-by-sun-belt-states-in-february/" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable" data-linkindex="15" data-ogsc="">home prices</a>, the <a href="https://www.showingtime.com/blog/february-2022-showing-index-results/" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable" data-linkindex="16" data-ogsc="">number of showings</a>, and the number of homes receiving <a href="https://twitter.com/EricFinnigan/status/1508575208738721794" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable" data-linkindex="17" data-ogsc="">multiple offers</a> all saw a substantial increase. However, much of the spike in mortgage rates occurred in March. We will not know the true impact of the increase in mortgage rates until the March housing numbers become available in early May.
Rick Sharga, EVP of Market Intelligence at ATTOM Data, <a href="https://www.attomdata.com/news/market-trends/home-sales-prices/attom-q1-2022-u-s-home-affordability-report/" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable" data-linkindex="18" data-ogsc="">recently</a> put rising rates into context:
Historically low mortgage rates and higher wages helped offset rising home prices over the past few years, but as home prices continue to soar and interest rates approach five percent on a 30-year fixed rate loan, more consumers are going to struggle to find a property they can comfortably afford.
While no one knows exactly where rates are headed, experts do think they'll continue to rise in the months ahead. In the meantime, if you're looking to buy a home, know that rising rates do have an impact. As rates rise, it'll cost you more when you purchase a house. If you're ready to buy, it may make sense to do so sooner rather than later.
Bottom Line
Mark Fleming got it right. Forecasting mortgage rates is an impossible task. However, it's probably safe to assume the days of attaining a 3% mortgage rate are over. The question is whether that will soon be true for 4% rates as well.
Contact the Marin Modern Team, your <a href="http://www.marincounty.com/" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable" data-linkindex="14" data-ogsc="">Marin County real estate</a> connection, for assistance buying or selling a home in Marin County California.2022-04-13T09:00:00-07:002022-04-13T18:15:05-07:00Marin Modern Teamtag:marincounty.com,2012-09-20:16877Key Things To Avoid After Applying for a Mortgage<img data-imagetype="External" src="https://files.mykcm.com/2021/12/21112712/20211227-KCM-Share-600x328.jpg" id="x__x0000_i1037" alt="Key Things To Avoid After
Applying for a Mortgage | MyKCM" style="width: 6.25in; height: 3.4166in;" width="600" height="328" border="0" />
Once you've found your dream home and applied for a mortgage, there are some key things to keep in mind before you close. It's exciting to start thinking about moving in and decorating your new place, but before you make any large purchases, move your money around, or make any major life changes, be sure to consult your lender – someone who's qualified to explain how your financial decisions may impact your home loan.
Here's a list of things you shouldn't do after applying for a mortgage. They're all important to know – or simply just good reminders – for the process.
1. Don't Deposit Cash into Your Bank Accounts Before Speaking with Your Bank or Lender.
Lenders need to source your money, and cash isn't easily traceable. Before you deposit any amount of cash into your accounts, discuss the proper way to document your transactions with your loan officer.
2. Don't Make Any Large Purchases Like a New Car or Furniture for Your Home.
New debt comes with new monthly obligations. New obligations create new qualifications. People with new debt have higher debt-to-income ratios. Since higher ratios make for riskier loans, qualified borrowers may end up no longer qualifying for their mortgage.
3. Don't Co-Sign Other Loans for Anyone.
When you co-sign, you're obligated. With that obligation comes higher debt-to-income ratios as well. Even if you promise you won't be the one making the payments, your lender will have to count the payments against you.
4. Don't Change Bank Accounts.
Remember, lenders need to source and track your assets. That task is much easier when there's consistency among your accounts. Before you transfer any money, speak with your loan officer.
5. Don't Apply for New Credit.
It doesn't matter whether it's a new credit card or a new car. When you have your credit report run by organizations in multiple financial channels (mortgage, credit card, auto, etc.), your FICO® score will be impacted. Lower credit scores can determine your interest rate and possibly even your eligibility for approval.
6. Don't Close Any Credit Accounts.
Many buyers believe having less available credit makes them less risky and more likely to be approved. This isn't true. A major component of your score is your length and depth of credit history (as opposed to just your payment history) and your total usage of credit as a percentage of available credit. Closing accounts has a negative impact on both of those determinants of your score.
Bottom Line
Any blip in income, assets, or credit should be reviewed and executed in a way that ensures your home loan can still be approved. If your job or employment status has changed recently, share that with your lender as well. The best plan is to fully disclose and discuss your intentions with your loan officer before you do anything financial in nature.
Contact the Marin Modern Team, your <a href="http://www.marincounty.com/" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable" data-linkindex="14" data-ogsc="">Marin County real estate</a> connection, for assistance buying or selling a home in Marin County California.2021-12-27T10:00:00-07:002021-12-27T19:10:35-07:00Marin Modern Teamtag:marincounty.com,2012-09-20:15222What Do Experts Say About Today's Mortgage Rates?<img data-imagetype="External" src="https://files.mykcm.com/2021/08/19154921/20210823-KCM-Share-600x328.jpg" class="x_webfeedsFeaturedVisual x_wp-post-image" alt="What Do Experts Say About
Today's Mortgage Rates? | MyKCM" style="display: block; margin-bottom: 5px; clear: both; max-width: 100%;" width="600" height="328" />
Mortgage rates are hovering near record lows, and that's good news for today's homebuyers. The <a href="http://www.freddiemac.com/pmms/pmms_archives.html" target="_blank" rel="noopener noreferrer" data-linkindex="2">graph</a> below shows mortgage rates dating back to 2016 and where today falls by comparison.<a href="https://files.mykcm.com/2021/08/19154923/20210823-MEM-Eng-1.png" target="_blank" rel="noopener noreferrer" data-linkindex="3"><img data-imagetype="External" src="https://files.mykcm.com/2021/08/19154923/20210823-MEM-Eng-1.png" class="x_aligncenter x_wp-image-99108" alt="What
Do Experts Say About Today's Mortgage Rates? | MyKCM" width="600" height="450" /></a>Generally speaking, when rates are low, you can afford more home for your money. That's why experts across the industry agree – today's low rates present buyers with an <a href="https://www.mykcm.com/2021/02/19/home-mortgage-rates-by-decade-infographic/" target="_blank" rel="noopener noreferrer" data-linkindex="4">incredible opportunity</a>. Here's what they have to say:
Sam Khater, Chief Economist at Freddie Mac, <a href="https://freddiemac.gcs-web.com/node/23271/pdf" target="_blank" rel="noopener noreferrer" data-linkindex="5">points out</a> the historic nature of today's rates:
As the economy works to get back to its pre-pandemic self, and the fight against COVID-19 variants unfolds, owners and buyers continue to benefit from some of the lowest mortgage rates of all-time.
Mark Fleming, Chief Economist at First American, <a href="https://blog.firstam.com/economics/affordability-declined-for-third-month-in-a-row" target="_blank" rel="noopener noreferrer" data-linkindex="6">talks about</a> how rates impact a buyer's bottom line:
Mortgage rates are generally the same across the country, so a decline in mortgage rates boosts affordability equally in each market.
Danielle Hale, Chief Economist at realtor.com, also notes the significance of today's low rates and <a href="https://www.realtor.com/research/freddie-mac-mortgage-rates-july-29-2021/" target="_blank" rel="noopener noreferrer" data-linkindex="7">urges buyers</a> to carefully consider their timing:
Those who haven't yet taken advantage of low rates to buy a home or refinance still have the opportunity to do so this summer.
Hale goes on to say that buyers who don't act soon could see <a href="https://www.mykcm.com/2021/07/19/what-you-should-do-before-interest-rates-rise/" target="_blank" rel="noopener noreferrer" data-linkindex="8">higher rates</a> in the coming months, negatively impacting their purchasing power:
We expect mortgage rates to fluctuate near historic lows through the summer before beginning to climb this fall.
And while mortgage rates are still low today, the data from Freddie Mac indicates rates are fluctuating ever so slightly right now, as they moved up one week before inching slightly back down in their latest release. It's important to keep in mind the influence rates have on your monthly mortgage payment.
Even small increases can have a big <a href="https://www.mykcm.com/2021/07/30/waiting-to-buy-a-home-could-cost-you-infographic/" target="_blank" rel="noopener noreferrer" data-linkindex="9">impact</a> on what you pay each month. Trust the experts. Today's rates give you opportunity and flexibility in what you can afford. Don't wait on the sidelines and hope for a better rate to come along; the rates we're seeing today are worth capitalizing on.
Bottom Line
Mortgage rates hover near record lows today, but experts forecast they'll rise in the coming months. Waiting could prove costly when that happens. Let's connect today to discuss today's rates and determine if now's the time for you to buy.
Contact the Marin Modern Team, your <a href="http://www.marincounty.com/" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable" data-linkindex="14">Marin County real estate</a> connection, for assistance buying or selling a home in Marin County California.2021-08-23T12:00:00-07:002021-08-23T14:56:32-07:00Marin Modern Teamtag:marincounty.com,2012-09-20:13633Planning to Move? You Can Still Secure a Low Mortgage Rate on Your Next Home<img data-imagetype="External" src="https://files.mykcm.com/2021/04/20113222/20210421-KCM-Share-600x328.jpg" class="x_webfeedsFeaturedVisual x_wp-post-image" alt="Planning to Move? You Can
Still Secure a Low Mortgage Rate on Your Next Home | MyKCM" style="display: block; margin-bottom: 5px; clear: both; max-width: 100%;" width="600" height="328" />
This year, mortgage rates have started to slowly climb above recent record-breaking lows. Many homeowners planning to <a href="https://www.mykcm.com/2021/03/08/5-reasons-to-sell-your-house-this-spring-2/" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable" data-linkindex="2">move</a> may feel like they've missed the chance to score a great rate on their next mortgage. In reality, there's still time to secure a rate far below the historic norm. Here's why.
After creeping up for seven consecutive weeks, average mortgage rates have dropped more <a href="http://www.freddiemac.com/pmms/pmms_archives.html" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable" data-linkindex="3">recently</a> (See graph below). With rates taking a slight dip over the past two weeks at the same time the inventory of houses for sale is so low, homeowners today are sitting in the <a href="https://www.mykcm.com/2021/02/24/how-much-leverage-do-todays-house-sellers-have/" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable" data-linkindex="4">optimal</a> seat to sell. What's the advantage of selling your house now? Securing a low mortgage rate on your next home.<a href="https://files.mykcm.com/2021/04/20113226/20210421-MEM-Eng-1.png" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable" data-linkindex="5"><img data-imagetype="External" src="https://files.mykcm.com/2021/04/20113226/20210421-MEM-Eng-1.png" class="x_aligncenter x_wp-image-97878" alt="Planning to Move? You Can Still Secure a Low Mortgage Rate on Your Next
Home | MyKCM" width="600" height="450" /></a>To take advantage of today's real estate market, experts are encouraging homeowners to act now before interest rates climb. Danielle Hale, Chief Economist at realtor.com, <a href="https://www.realtor.com/research/video-weekly-economic-and-housing-market-update-apr-16-2021/" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable" data-linkindex="6">explains</a>:
…mortgage rates slid for a second week … but we don't expect rates to stay at this level for too long.
Hale continues to say:
For sellers, getting in early optimizes odds of a quick sale at a good price before there's too much competition, but that means acting now … In this environment, sellers probably really can't go wrong, and that's especially true in the nation's hottest housing markets where homes are selling quickly and getting the greatest number of viewers online.
Most experts agree that rates will continue to trend upward. Sam Khater, Chief Economist at Freddie Mac, <a href="https://freddiemac.gcs-web.com/node/22536/pdf" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable" data-linkindex="7">states</a>:
Despite the pause in mortgage rates recently, we expect them to increase modestly for the remainder of this year.
In addition, Freddie Mac recently released their <a href="http://www.freddiemac.com/research/forecast/20210414_quarterly_economic_forecast.page" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable" data-linkindex="8">Quarterly Forecast</a>, which notes:
We forecast that mortgage rates will continue to rise through the end of next year. We estimate the 30-year fixed mortgage rate will average 3.4% in the fourth quarter of 2021, rising to 3.8% in the fourth quarter of 2022. (See graph below):
<a href="https://files.mykcm.com/2021/04/20170103/20210421-MEM-EN2.jpg" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable" data-linkindex="9"><img data-imagetype="External" src="https://files.mykcm.com/2021/04/20170103/20210421-MEM-EN2.jpg" class="x_aligncenter x_wp-image-97882" alt="Planning to Move? You Can Still Secure a Low Mortgage Rate on Your Next
Home | MyKCM" width="600" height="450" /></a>While buyers everywhere want to secure the lowest rate possible, it's important to remember that today's rates are still much lower than the historic norm. Odeta Kushi, Deputy Chief Economist at First American, <a href="https://blog.firstam.com/economics/interview-with-cnbc-how-rising-rates-may-impact-housing-affordability-as-spring-home-buying-season-ramps-up" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable" data-linkindex="10">emphasizes</a>:
While mortgage rates have trended up in recent months, they are still historically low, so relative to one year ago, housing actually is still more affordable and that's really thanks to this low mortgage rate environment we find ourselves in.
Bottom Line
If you're thinking of moving, don't miss the opportunity to score a great rate on your next home mortgage. Let's connect today so you can get your house ready to sell and find your dream home while mortgage rates are still low.
Contact the Marin Modern Team, your <a href="http://www.marincounty.com/" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable" data-linkindex="14">Marin County real estate</a> connection, for assistance buying or selling a home in Marin County California.2021-04-21T12:00:00-07:002021-04-21T16:34:43-07:00Marin Modern Teamtag:marincounty.com,2012-09-20:13290Should We Fear the Surge in Cash-Out Refinances?<img data-imagetype="External" src="https://files.mykcm.com/2021/03/22164901/20210323-KCM-Share-600x328.jpg" class="x_webfeedsFeaturedVisual x_wp-post-image" alt="Should We Fear the Surge in
Cash-Out Refinances? | MyKCM" style="display: block; margin-bottom: 5px; clear: both; max-width: 100%;" width="600" height="328" />
Freddie Mac recently released their <a href="http://www.freddiemac.com/research/datasets/refinance-stats/index.page" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable">Quarterly Refinance Statistics</a> report which covers refinances through 2020. The report explains that the dollar amount of cash-out refinances was greater in 2020 than in recent years. A cash-out refinance, as <a href="https://www.investopedia.com/terms/c/cashout_refinance.asp" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable">defined</a> by Investopia, is:
a mortgage refinancing option in which an old mortgage is replaced for a new one with a larger amount than owed on the previously existing loan, helping borrowers use their home mortgage to get some cash.
The Freddie Mac report led to articles like the one published by The Real Deal titled, House or ATM? Cash-Out Refinances Spiked in 2020, which <a href="https://therealdeal.com/national/2021/03/11/house-or-atm-cash-out-refinancings-spiked-in-2020/" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable">reports</a>:
Americans treated their homes like ATMs last year, withdrawing $152.7 billion amid a cash-out refinancing spree not seen since before the 2008 financial crisis.
Whenever you combine the terms spiked, homes like ATMs, and financial crisis, it conjures up memories of the housing crash we experienced in 2008.
However, that comparison is invalid for three reasons:
1. Americans are sitting on much more home equity today.
Mortgage data giant Black Knight just issued information on the amount of <a href="https://www.blackknightinc.com/blog-posts/tappable-equity-skyrockets-to-record-high-in-2020/" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable">tappable equity</a> U.S. homeowners with a mortgage have. Tappable equity is the amount of equity available for homeowners to use and still have 20% equity in their home. Here's a graph showing the findings from their report:<a href="https://files.mykcm.com/2021/03/22164858/20210323-MEM-Eng-1.png" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable"><img data-imagetype="External" src="https://files.mykcm.com/2021/03/22164858/20210323-MEM-Eng-1.png" class="x_aligncenter x_wp-image-97603" alt="" width="600" height="450" /></a>In 2006, directly before the crash, tappable home equity in the U.S. topped out at $4.6 trillion. Today, that number is $7.3 trillion.
As Black Knight explains:
At year's end, some 46 million homeowners held a total $7.3 trillion in tappable equity, the largest amount ever recorded…That's an increase of more than $1.1 trillion (+18%) since the end of 2019, the largest percentage gain since 2013 and – you guessed it – the largest dollar value gain in history, to boot. All in all, it works out to roughly $158,000 on average per homeowner with tappable equity, up nearly $19,000 from the end of 2019.
2. Homeowners cashed-out a much smaller amount this time.
In 2006, Americans cashed-out a total of $321 billion. In 2020, that number was less than half, totaling $153 billion. The $321 billion made up 7% of the total tappable equity in the country in 2006. On the other hand, the $153 billion made up only 2% of the total tappable equity last year.
3. Fewer homeowners tapped their equity in 2020 than in 2006.
Freddie Mac reports that 89% of refinances in 2006 were cash-out refinances. Last year, that number was less than half at 33%. As a percentage of those who refinanced, many more Americans lowered their equity position fifteen years ago as compared to last year.
Bottom Line
It's true that many Americans liquidated a portion of the equity in their homes last year for various reasons. However, less than half of them tapped their equity compared to 2006, and they cashed-out less than one-third of that available equity. Today's cash-out refinance situation bears no resemblance to the situation that preceded the housing crash.
Contact Marin Modern Real Estate, experienced <a href="http://www.marincounty.com/" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable">Marin County Realtors</a>, for help purchasing or selling a home in Marin County.2021-03-23T12:00:00-07:002021-03-23T10:32:03-07:00Marin Modern Teamtag:marincounty.com,2012-09-20:2042Solar Panels: Why You Should Buy and Not Lease<img style="display: block; float: right; margin-bottom: 30px; margin-left: 15px; width: 475px;" src="https://assets.site-static.com/userfiles/551/image/purchase-solar.jpg" alt="Why You Should Skip the Lease and Purchase Your Solar Panels" width="950" height="713" />When it comes to making a home more <a href="http://www.marincounty.com/blog/earn-money-back-with-energy-efficient-upgrades-with-high-roi/" target="_blank">environmentally friendly</a>, solar panels are one of the first things homeowners think about. Solar panels can be an excellent way to save energy and money over time, and there are multiple ways to get them. The first way is to use cash or a solar loan in order to purchase the panes, and the second is to lease the solar panels from a company. However, these options are not equal. Here are some of the reasons why homeowners should purchase solar panels instead of leasing them.
Cost
Solar panels are not an addition that can be made on a whim. Depending on the quality of the panels and size of the roof, it can cost anywhere from $15,000-30,000 to purchase solar panels. It’s these steep up front costs that often make homeowners look into leasing panels instead of purchasing them outright. Loans typically last 20-25 years, which is roughly the lifespan of the solar panels themselves, and make it easier to obtain the panels. However, homeowners who lease their solar panels will miss out on <a target="_blank" href="http://www.solarcity.com/residential/solar-energy-tax-credits-rebates">possible tax benefits</a> and rebates that may save up to 50 percent of the cost of the panels.
Lease contracts will also take energy cost inflation into account when they’re created and will usually increase about 2-3 percent per year. If energy costs don’t rise as predicted in the contract, this can mean homeowners leasing solar panels will pay even more money than they already would.
Savings
Aside from being environmentally conscious, people like solar panels because they help save money over time. But those savings are significantly different between purchasing the panels and leasing them. The amount of money that can be saved by solar panels will be <a target="_blank" href="http://education.seattlepi.com/location-sun-affect-amount-energy-solar-panels-collect-5021.html">directly influenced</a> by the wattage of the solar panels as well as how much sun they get, but homeowners who have purchased their solar panels can see savings of 40-70 percent of their monthly electric bill. Homeowners who have eased their solar panels, however, will only see 10-30 percent savings.
Savings from purchased solar panels can even collect over the years enough to completely cover the cost of purchasing the solar panels. If a homeowner spends $100 per month, they can save up to $8,400 over the course of ten years on purchased solar panels in their <a href="http://www.marincounty.com/tiburon/" target="_blank">Tiburon</a> home, or up to just $3,600 on leased solar panels, and that isn’t accounting for fees from the lease contract.
Selling with Solar
Another feature of solar panels that homeowners love is how they increase a home’s value by $15,000-22,000. However, what homeowners don’t realize is how only solar panels that have been purchased will raise a home’s value. Leased solar panels don’t affect the home’s value, but they do have a <a target="_blank" href="http://www.latimes.com/business/realestate/la-fi-harney-20150322-story.html">tendency of putting buyers off</a> because of the long lease that remains with the home because of the transferal. Fortunately, it is possible for homeowners with leased solar panels to buy out the remainder of their lease before selling the home in order to make it more appealing for buyers, though this is often a costly choice totaling thousands of dollars.
All in all, solar panels are most effective when they’re purchased. Although the monetary investment is far higher to purchase than to lease, the savings homeowners can make it all worth it, especially if they intend on selling the home with the solar panels installed one day. Leasing may have its few uses, but purchasing solar panels is truly the more effective option.2017-12-26T10:18:00-07:002017-12-26T10:24:01-07:00Barry Adelmanntag:marincounty.com,2012-09-20:1947VA Loans: What are the Options?<img style="display: block; float: right; margin-bottom: 30px; margin-left: 15px; width: 475px;" src="https://assets.site-static.com/userfiles/551/image/va-loan-types.jpg" alt="What Kind of VA Loans are There" width="950" height="713" />One of the benefits offered to members of the US Armed Forces is the ability to take out a Veteran’s Affair’s (VA) loan when it comes time to buy a home. However, there isn’t just one VA loan that fits all needs, and many veterans don’t realize they have may have options for the loan they want to take out. Here are the different types of VA loans and the different advantages they each have.
VA Purchase Loans
The Purchase Loan is the loan most people think of whenever someone talks about VA loans. With a Purchase Loan, applicants won’t have to pay any closing fees when purchasing a home. However, hey will have to pay a VA Funding Fee that helps the program keep running in the future. The Funding Fee is a one-time payment, and its <a target="_blank" href="https://www.veteransunited.com/education/tools/funding-fee-calculator/">cost will vary</a> based on the cost of the home that is being purchased. Purchase Loans also typically feature lower interest rates than normal loans as well as 100% financing.
Native American Direct Loan
As the name might imply, these loans are exclusive to Native American veterans. However, they can only be used if the applicant in question intends to either purchase or build a home on Native American Trust land and has a valid <a target="_blank" href="https://www.benefits.va.gov/homeloans/purchaseco_certificate.asp">Certificate of Eligibility</a> (COE) to apply for the loan. Native American Direct Loans don’t require a down payment, and the maximum loan limit for most areas can be more than $424,000. The applicant will also have reduced closing costs.
Cash-Out Refinance Loan
Cash-Out Refinance Loans are unique among VA loans because they can be used to do more than just buy a home. With one of these loans, a veteran is able to <a target="_blank" href="http://www.investopedia.com/terms/h/home_equity.asp">take cash out of the home’s equity</a> value so they can use it for things such as paying off credit cards, paying student loans, doing home improvements, and other expenses. In addition, these loans can also be used to refinance a normal loan into a VA loan.
Interest Rate Reduction Refinance Loan (IRRRL)
IRRRL loans are intended to be the most easily accessible and take the least time to apply and get approved for because they help veterans who already have another VA loan. A veteran is able to use an IRRL loan to be able to refinance and adjustable rate mortgage into a fixed rate mortgage. However, it’s possible that this will cause the loan’s interest rate to increase. Using an IRRRL loan will also require the applicant to pay a VA Funding Fee.
Specially Adapted Housing (SAH) Grant
These grants can be a good choice for veterans who need to renovate their home to make it <a target="_blank" href="http://www.hgtv.com/remodel/interior-remodel/creating-accessible-homes">more accessible</a> by adding wheelchair ramps, first floor laundry, and other necessities. But if the veteran decides they’d rather start from scratch, they can also use the SAH grant to buy property and build a new home from the ground up. SAH grants come with a 30-year fixed-rate mortgage upon completion of the home.
Special Housing Adaptation (SHA) Grant
SHA grants are very similar to SAH grants, but the key difference is that SHA grants will only let veterans buy or modify an home that is already built, while SAH grants let veterans dot hat as well as build a custom home.
These are all the different loan options veterans have available to them upon qualifying for a VA loan, and each is idea for a different situation. The benefits may be great enough to purchase a home in a great <a target="_blank" href="http://www.marincounty.com/lagunitas/">market like Lagunitas</a>. After learning the basics, be sure to do plenty of in-depth research before filling out an official application.2017-09-12T08:09:00-07:002017-09-12T08:12:08-07:00Barry Adelmanntag:marincounty.com,2012-09-20:1874FHA Loans: An Informational Guide for Home Buyers<img style="display: block; float: right; margin-bottom: 30px; margin-left: 15px; width: 475px;" src="https://assets.site-static.com/userfiles/551/image/fha-loan-guide.jpg" alt="FHA Loans for First-Time Home Buyers" width="950" height="713" />Shopping for the <a href="http://www.marincounty.com/blog/fha-fannie-mae-and-freddie-mac-whats-the-difference/" target="_blank">right home loan</a> can be nearly as important as shopping for the right home. Failing to compare the benefits and limitations of each type of loan option can mean paying unnecessary costs and fees associated with obtaining the home loan as well as higher interest rates over the life of the loan. Since the <a href="https://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/fhahistory" target="_blank">Federal Housing Administration</a> was created as part of the National Housing Act of 1934, it has provided home loan options for millions of buyers and continues to offer benefits to thousands more each year.
What is an FHA Home Loan?
FHA home loans are not actually issued by the Federal Housing Administration. Instead, these loans are issued by approved banks and lending institutions and insured by the FHA. If a home owner defaults on their FHA home loan, the Federal Housing Administration pays a claim to the issuing lender. This practice allows lenders to make loans to more borrowers while incurring less risk.
Benefits of Using an FHA Loan
FHA home loan programs can benefit home buyers in a number of ways. Some of the most popular benefits include:
Low or no down payment options, usually no more than 3.5% of the purchase price of the home
An ability for buyers with lower credit scores to obtain an FHA loan
A stringent appraisal process to ensure the home is in good condition and buyers will not incur large repair bills when they move into the home
The option for sellers to pay for repair issues noted on the appraisal
The option to have sellers contribute funds toward the buyer's closing costs
FHA loan programs are available for both site built homes as well as some other types of houses, such as modular homes and manufactured housing. In addition, FHA home loans can be used to purchase multi-family homes, such as duplexes and multi-unit buildings.
Are FHA Loans Limited to First-time Buyers?
A common misconception about FHA home loans is that they are specifically designed for and limited to first-time buyers. This misconception is <a href="https://themortgagereports.com/13330/the-6-biggest-myths-of-fha-mortgages-and-how-you-can-use-them-to-get-approved" target="_blank">completely false</a> and any buyers who meet FHA guidelines can use these loans at any time. In addition, there is no usage restrictions, making it possible for buyers to use FHA loans more than once.
Where are FHA Home Loans Available?
FHA home loans are available through any bank, credit union, or mortgage lender that has been expressly approved by the Federal Housing Administration. Lenders who are approved to make FHA loans will typically post this information on their websites. Prospective buyers can also find a <a href="https://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/lender/lenderlist" target="_blank">searchable list</a> of lenders on the official FHA website.
Real Estate Agents and FHA Home Loans
Prospective buyers who are interested in pursuing an FHA loan for their next home purchase are recommended to discuss their intention with a real estate professional before beginning their home search. Because FHA guidelines require homes to meet condition guidelines to qualify for the loan, a knowledgeable real estate agent can provide important insights for buyers to help them better focus their search.
In addition, a real estate professional who has experience with the FHA home loan program is better situated to help prospective buyers write an effective offer that will be more likely to help convince sellers to assist buyers with closing costs.
Real estate professionals can also provide referrals to lenders in the area who offer FHA loan programs for buyers to help buyers get pre-approved for the loan program, as well as answer any questions they may have.2017-06-13T11:17:00-07:002017-06-13T11:22:31-07:00Barry Adelmanntag:marincounty.com,2012-09-20:1852What You Need to Know About Qualifying for a Mortgage [INFOGRAPHIC]<img src="https://assets.site-static.com/userfiles/551/image/Mortgage-Process-STM-364x600.jpg" width="364" height="600" />
Some Highlights:
Many buyers are purchasing a home with a down payment as little as 3%.
You may already qualify for a loan, even if you don't have perfect credit.
Take advantage of the knowledge of your local professionals who are there to help you determine how much you can afford.
Contact Marin Modern Real Estate, experienced <a href="http://www.marincounty.com/" target="_blank" rel="noopener noreferrer">Marin County Realtors</a>, for help purchasing or selling a home in Marin County.2017-05-12T12:00:00-07:002017-06-29T15:16:15-07:00Barry Adelmanntag:marincounty.com,2012-09-20:1796Understanding the Reverse Mortgage<img style="display: block; float: right; margin-bottom: 30px; margin-left: 15px; width: 475px;" src="https://assets.site-static.com/userfiles/551/image/home-equity-conversion-mortgage.jpg" alt="What is a Reverse Mortgage?" width="950" height="713" />As home owners approach retirement, they may be concerned about not having enough money to cover their living expenses on a fixed income. You may have heard of a reverse mortgage as a way to supplement your income, without having to sell your home and downsize.
This guide shows you the details surrounding a reverse mortgage, and how to determine if it is the right choice for you.
What is a Reverse Mortgage?
When you get a traditional mortgage, you borrow a certain amount of money from a bank to finance or refinance a home, and then make monthly mortgage payments with interest. With a reverse mortgage, also known as a <a href="https://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hecm/hecmabou" target="_blank">Home Equity Conversion Mortgage</a>, you use the home’s equity to get a loan from the lender.
The lender makes payments to you at a specified interval, which can range from a lump sum at closing to fixed monthly payments for the rest of your life, depending on the loan terms. As long as you fulfill the requirements of the loan, you are not required to leave the home. Some people consider a reverse mortgage to be an effective way to supplement their income in retirement.
Who Can Qualify for a Reverse Mortgage?
There are a few simple qualifications you have to meet in order to be able to get a reverse mortgage. Applicants must:
Be at least 62 years old
Maintain the home (or a unit in a 2-4-unit dwelling) as a primary residence
Own most or all of the home outright
If you qualify, you may be able to apply for a loan that is guaranteed by the Federal Housing Administration. The lender will look at your finances to confirm that you can pay for the upkeep on the home, as well as insurance and property taxes. The <a href="http://www.reversemortgageadviser.com/age-formula-reverse-mortgage-rate-calculations.htm" target="_blank">amount of money</a> you receive is determined by the value of the home, the amount of equity you have and the age of the youngest borrower. Usually, the older you are, the greater percentage you can receive.
Can I Get a Reverse Mortgage With a Current Mortgage?
Although getting a reverse mortgage is available for owners only if they have paid off their home, you may sometimes get a reverse mortgage while you still owe some money on an existing mortgage. In that case, you would use a portion of the proceeds from the reverse mortgage to pay off the current mortgage. However, you should carefully consider getting a <a href="http://www.consumerfinance.gov/askcfpb/1215/are-there-any-limitations-upfront-charges-bank-can-charge-reverse-mortgage.html">reverse mortgage</a> if you still owe a significant amount of money.
Drawing out more than 60 percent of the available money in the first year typically subjects you to a 2.5 percent upfront mortgage insurance premium (MIP) instead of the standard 0.5 percent. You will also be charged interest on all money you receive in the reverse mortgage.
Do I Have to Pay Closing Costs?
Just like any other mortgage loan, the lender has to process your application, pay for an appraisal and prepare paperwork. Beyond the origination fees and the <a href="http://www.consumerfinance.gov/askcfpb/237/what-are-the-costs-i-will-have-to-pay-for-a-reverse-mortgage.html" target="_blank">real estate closing costs</a>, you also must pay MIP. Most reverse mortgages are insured by the FHA, and the insurance protects your payments if your lender should go out of business.
It also helps to reduce the burden if you continue to receive monthly payments after the total equity in the home has been depleted. You will usually be charged an upfront mortgage insurance fee that is based on the amount of money you take out in the first year, and then a 1.25 percent rate for mortgage insurance for the life of the loan.
Does the Bank Charge Interest?
The way that the lender makes money on a reverse mortgage is through interest. You may get a loan with a fixed interest rate or an adjustable rate. Fixed-rate reverse mortgages have the same rate for the duration of the loan, while adjustable-rate reverse mortgages can change rates at a regular interval.
Unlike a regular mortgage, you do not have to pay the interest monthly; Interest is accrued on the money you receive as you get it. The more you take in the loan, the more interest you have to pay over time. The interest is paid when the loan matures, through the sale of the home.
When Does the Loan Come Due?
The terms of the standard reverse mortgage allow you to stay in the home for as long as you want, but there are a few caveats. When you sign for the reverse mortgage, you typically agree to provide reasonable upkeep for the home and pay property taxes and insurance. Borrowers who fail to stay current on these payments or maintain the home may be subject to loan maturity.
This could also happen if one or more of the borrowers moves away or sells the home. Loan maturity means that you must repay the loan, usually through the sale of the home. The remaining equity is given to you or your next-of-kin. If you follow all the rules, you can stay in the home until death, even if the payments exceed the total equity in the home.
What If Two People Live in the Home?
The ability to stay in the home almost always applies to the borrowers for the reverse mortgage that live in the home. If there is only one borrower in the home, but two people live there, the loan may come due when any of the above terms are met. In this case, it is better to ensure that all adults planning to live in the home long-term act as co-borrowers. If this is not possible, you should consider housing alternatives for anyone still living in the home once it is sold.
How Do I Receive Payment?
You have a number of options for <a href="http://www.reversemortgage.org/About/Types-of-Reverse-Mortgages/HECM-Payment-Options" target="_blank">disbursement of the funds</a>, and your lender may be able to help you pick one. Some people prefer to receive a lump sum all at once, while others like the security of a regular monthly payment. You can even specify that you would like to have the loan as a line of credit you can use as needed. In all cases, you only pay interest on the money you receive.
Getting a reverse mortgage is not for everyone. It may be ideal if you need a source of income in retirement, plan to live in the home for many years, and are able to maintain the property. The way that you receive money affects how much you can borrow, and you will pay a percentage of the loan in closing costs. With those financial obligations in mind, you can decide if a reverse mortgage is a good financial decision for your needs.2017-02-22T10:19:00-07:002017-02-22T10:27:02-07:00Barry Adelmanntag:marincounty.com,2012-09-20:1768The Life Cycle of a Mortgage<img style="display: block; float: right; margin-bottom: 30px; margin-left: 15px; width: 475px;" src="https://assets.site-static.com/userfiles/551/image/mortgage-loan-process.jpg" alt="Mortgage Application and Servicing" width="950" height="713" />As you <a href="http://www.marincounty.com/idx/search-form/">search</a> for a mortgage, you may think that your lender will be your loan provider and mortgage servicer for the life of the loan. The truth is more complicated, with many entities having some control over the process at various stages.
With this guide, you will gain a better understanding of every step of your mortgage, from the beginning of the loan process, to the final payment. To better understand how different mortgages will work within your personal situation, speak with a lender or financial advisor.
1. Researching Lenders
Before applying for a mortgage loan, home buyers often decide on a couple of lenders they would like to consider. Shopping around is more likely to give you better rates and terms, and to help you understand what is available with your income and credit. Unfortunately, about half of <a href="http://www.consumerfinance.gov/about-us/blog/nearly-half-of-mortgage-borrowers-dont-shop-around-when-they-buy-a-home/" target="_blank">home buyers</a> only seriously research one lender, and 77 percent of home buyers apply to only one lender.
2. The Difference between a Mortgage Pre-Qualification and a Mortgage Pre-Approval
Home buyers shopping for a mortgage should know the difference between a mortgage pre-qualification and a pre-approval. In most cases, a mortgage pre-qualification is simply taking the information you provide and placing it into a mortgage calculator to determine if you have enough income to buy a home and your approximate top budget. A mortgage pre-qualification usually does not include a review of any documents, verification of income or debts.
A mortgage pre-approval is often more detailed, with the mortgage broker or loan officer requesting a minimal amount of documentation and running a credit check.Applying for <a href="http://www.usatoday.com/story/money/personalfinance/2015/08/05/credit-dotcom-mortgage-pre-approval/30292161/" target="_blank">mortgage pre-approval</a> with more than one lender gives you the opportunity to select the mortgage offer with the best terms for your needs. Be wary of anyone saying you can get pre-approval in minutes, however, because they may actually be only mortgage pre-qualifications and may not always be taken seriously by home sellers. Do some research online, but you may also ask friends and family members, as well as your real estate agent, for recommendations of lenders in your area.
2. Application
Applying for a mortgage often comes at two possible times. The first is mortgage pre-approval, when you submit an application and are tentatively approved for a loan, should the property meet the lender’s specifications. You may also apply for a mortgage after making an offer on a home, but many home buyers prefer to know that you have already been approved.
An application for a mortgage loan requires extensive documentation of your income, assets, debts and ability to pay back the loan. The process of basic loan approval can take hours or days, depending on how easy it is for the lender to collect the necessary data. If you gather documentation about savings, investments, tax records and bank statements in advance, you may be able to speed the process somewhat.
3. Underwriting
Once you have a signed home purchase agreement, the lender will then begin requesting more detailed documentation. This begins the <a href="http://www.bankrate.com/finance/mortgages/closing-day-processes.aspx" target="_blank">process of loan underwriting</a>. The underwriting process involves the verification of your information and an assessment of the property you want to buy, and may be completed in-house or by a separate organization. The underwriter’s role is to determine that all of your information is correct and that the accepted offer is reasonable for the value of the property and home.
Underwriters also confirm that the terms of your proposed mortgage meet standards set by the lender or by other entities, such as the Federal Housing Administration (FHA). The underwriter can assess the level of risk that your mortgage poses to the lender, and help the lender decide if it is a good deal. The loan may sometimes fail at this stage, if the home is not worth what the seller claimed, or if there is not enough supporting documentation to approve the loan.
4. Approval and Closing
Although the approval for a mortgage and a closing are often viewed as similar, they are not the same thing. If you received a mortgage pre-approval, your lender will review the details and confirm that your closing date is within a term set when pre-approval was completed.
The lender then makes a final offer to you for the loan, and must provide you with a <a href="http://www.consumerfinance.gov/askcfpb/180/what-is-a-truth-in-lending-disclosure.html" target="_blank">Truth-in-Lending Disclosure</a>. This document gives you the relevant summary of your loan, that you can use to verify that you will receive the same terms as you were originally offered.
If the terms are different than originally quoted, you are usually not legally obligated to accept the loan. If everything seems in order and you are ready to proceed, you close on the loan and your lender records the purchase with the county clerk.
5. Mortgage Servicing
After your loan is closed and you the home buying process is completed, your lender shifts to a role as a mortgage servicer. However, your lender may choose to contract out to a third-party organization to provide the mortgage servicing. Mortgage servicing typically includes monthly repayments, renegotiating of interest rates if you have an adjustable-rate mortgage (ARM), and the levying of any penalties due to late or missed payments.
If you have questions about your mortgage, you should direct them to the mortgage servicer. Payments of property taxes into escrow and private mortgage insurance payments are also handled by the mortgage servicer in most cases. You will know who is your mortgage servicer by looking at your monthly mortgage bills.
6. Loan Selling and Securitization
Quite often, your loan may be sold by the lender to another lender or to an entity that buys mortgages. Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation) are two government-run organizations that buy loans from lenders.
If your loan meets the underwriting requirements, these organizations or others may buy your loan so that your lender is free to lend money to other people. Mortgage loans are usually packaged up with other mortgages and sold, known as “<a href="http://www.investopedia.com/terms/s/securitization.asp" target="_blank">securitization</a>.” Primary and secondary mortgages can and often are sold to separate entities. You do not get to decide if your loan is sold or not. However, the lender must notify you of this change, and the buyer of your mortgage must keep the same terms that were agreed to when you signed the closing documents.
7. Refinancing and Loan Payoff
Your loan may be sold and serviced by several different organizations over the life of the loan. If you choose to <a href="https://www.nerdwallet.com/blog/mortgages/how-to-refinance-your-mortgage/" target="_blank">refinance your mortgage</a>, you are not required to go with the same lender who currently holds your mortgage. Refinancing your mortgage creates an entirely new set of terms to follow, possibly with a new lender or mortgage servicer.
Unless you sell the home and pay off the loan, you can expect to pay many years of the payment of principal and interest. At first, you pay far more in interest than you do in principal. By the end, you are paying almost entirely principal. This is referred to as loan amortization. Once the loan is repaid, the lender clears the lien from your home and you own it outright. Refinancing a mortgage can be complicated, so it is important to speak with a lender to understand the implications and impact of doing so.
Applying for a mortgage is a lot of work, but that is only the first of many steps. Once you have closed on your loan, your primary obligation is to keep track of your mortgage and make all payments on time.
#hw2017-01-13T14:16:00-07:002017-01-20T23:09:57-07:00Barry Adelmanntag:marincounty.com,2012-09-20:1720PACE Loans - the good and the bad...There has been some buzz going on around about a recent legislation that has passed in California that is now rolling out in Marin County. Have you heard of PACE? What is it? Is it good or bad? How can this help homeowners? The talk around town has been very mixed!
PACE stands for Property Assessed Clean Energy. It is a way for homeowners to finance energy efficiency, renewable energy and water conservation upgrades in their home. These upgrades can include solar panels, new windows, tank less hot water heaters, new heating and cooling systems, insulation, lighting improvements, and water pumps…just to name a few.
There are several companies that partner with PACE to provide this kind of financing. HERO or SCEIP are a couple common names in our area. Rates on these loans can be anywhere from 5-10% and the terms can be from 5-20 years. Unlike other loan products, the loan is rolled into the homeowner’s property taxes as an assessment. The payment is fixed and it stays with the property when transferred in a sale. Many people can qualify for these loans with little equity in their homes while a home equity line of credit may require more equity in the home and a lot more paperwork for loan approval.
So there are pros and cons for sure. You may pay higher to carry the PACE loan and it is a fixed payment at a higher interest rate than a HELOC in most cases. However, the homeowner may be able to get the loan when they cannot pull money out of the house for home improvements because there is not enough e quity. In addition, a HELOC is adjustable while the PACE loan is not. Also, when it comes to selling the house, the buyer would have to be willing to take on this extra assessment on their tax bill unless the seller pays it off at close. There can sometimes be complications in transferring the loan over to the new homeowner.
If you are looking to finance energy efficient home improvements without pulling equity from your home, it can certainly be a great solution for you. The program is marketed so that the consumer will believe the costs of the loan will offset the increasing costs in energy down the road. I think this theory is still yet to be determined. One thing to think about as well, is that this kind of loan is not tax deductible just because it is rolled into your tax bill. So, no perks there! And if you do plan to sell your home in the future, before the loan is paid off, it could be problematic unless you have planned to pay it off before closing.
Make sure to consult a professional and your accountant before jumping on this program to ensure that you are making the right decision for your future plans. If you are purchasing a home, make sure your Realtor reviews the property tax bill and preliminary title report thoroughly with you so there are no surprises in the middle of escrow regarding these kinds of liens on a property.2016-11-06T09:54:00-07:002016-11-06T13:16:10-07:00Enrica Pricetag:marincounty.com,2012-09-20:1718FHA, Fannie Mae and Freddie Mac: What's the Difference?<img style="display: block; float: right; margin-bottom: 30px; margin-left: 15px; width: 475px;" src="https://assets.site-static.com/userfiles/551/image/different-lending-institutions.jpg" alt="Difference Between FHA Fannie Mae and Freddie Mac" width="950" height="713" />You have probably heard of FHA loans, but you may not be aware that other organizations buy mortgages as well.
These entities, sponsored by the government, use different methods to encourage homeownership and promote lending as a way to strengthen the economy.
With this guide, you will understand how the FHA, Fannie Mae and Freddie Mac function, and what these organizations do to assist potential home buyers obtain a mortgage.
And in all cases, it is always helpful to speak with a lender, mortgage broker or financial advisor to see which mortgage loans may work for your current financial situation.
What is an FHA Loan?
The <a href="http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/fhahistory" target="_blank">Federal Housing Administration (FHA)</a> came into existence during the Great Depression, when the federal government realized that banks needed protection to guarantee the mortgages that they offered to borrowers. The FHA now serves certain buyers qualify for mortgages, especially those who cannot get a loan through conventional methods. These potential home buyers may include those with:
low income
limited credit or lower credit scores
minimal ability to make a down payment
The FHA does not provide the money for a mortgage, nor does it buy the mortgage debt from your lender once the loan is approved. Rather, the FHA insures the loan. In doing so, the lender may have more security loaning money in the form of mortgages to a greater percentage of borrowers. FHA loans typically have income limitations and maximums on the amount a potential buyer can get for a loan based on home prices in the area. In exchange, an FHA loan may, in some cases, be approved with lower credit scores and a down payment as low as 3.5 percent.
What are Fannie Mae and Freddie Mac?
The Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) act as support for lenders, so they can give more money to potential home buyers. Unlike the FHA, Fannie Mae and Freddie Mac do not insure loans given by lenders. Instead, they buy mortgage debts from banks and other financial institutions. They package up a variety of mortgages and sell <a href="http://www.investopedia.com/terms/m/mbs.asp" target="_blank">mortgage-backed securities</a> to investors. In many cases, the mortgages are packaged specifically to spread out the degree of risk that any particular loan in one security may default. Fannie Mae sold $25.9 billion in mortgage-backed securities in August 2016.
These organizations also set standards for loans that lenders will offer to buyers. The recent housing crisis demonstrates why Fannie Mae and Freddie Mac standards are important. For a time, general home lending practices were so relaxed that borrowers were often obtaining loans for higher amounts than they could reasonably afford. As a result, the mortgage-backed securities that Fannie Mae and Freddie Mac sold were increasingly risky, with a far higher rate of default.
The federal government, with these organizations, tightened lending requirements and provided stricter punishments for predatory lending practices. This helps to ensure that borrowers receive loans they can manage, and Fannie Mae and Freddie Mac are less likely to lose money on the mortgage debt they buy.
Can I Get a Loan From Fannie Mae or Freddie Mac?
<img style="display: block; float: right; margin-bottom: 30px; margin-left: 15px; width: 475px;" src="https://assets.site-static.com/userfiles/551/image/home-loan-institutions.jpg" alt="Mortgage Lenders" width="950" height="713" />
You may have read about mortgages from Fannie Mae, but the exact nature of these loans is a bit indirect. Fannie Mae and Freddie Mac do not actually loan money to borrowers. Instead, they establish standards that lenders must follow if they want Fannie Mae or Freddie Mac to buy their mortgage debt.
Home lenders want to follow these standards as much as possible, because the amount of mortgage debt that these organizations purchase is quite large. They will not buy the lenders mortgage debt unless these guidelines are followed. In August 2016 alone, Fannie Mae bought about $32.5 billion in mortgages.
The loan you get from your lender originates with the bank, credit union or other lending institution. However, you might in some cases get a loan product created by Fannie Mae that is offered by your lender.
What is a Fannie Mae Loan?
When you hear people refer to a “Fannie Mae loan”, they are actually talking about one of the Fannie Mae loan products that your lender may offer to certain qualified borrowers. Fannie Mae has many loan products, two of which allow buyers to get a mortgage with only a 3 percent down payment. These loan products are called HomeReady and Conventional 97.
The HomeReady mortgage loan targets borrowers with lower incomes, or those who live in certain areas. If you meet these requirements, you may be able to get a Fannie Mae-backed loan with a 3 percent down payment from flexible funding sources, plus a lower mortgage insurance payment. If you do not meet the income specifications for the HomeReady loan, but you qualify as a first time home buyer, the Conventional 97 may be applicable to you. Unlike the HomeReady loan, this loan product typically does not set limits on the lender’s requirements for credit worthiness or mortgage insurance payments.
Which Loan Product is Right for Me?
Even though the FHA and Fannie Mae both give borrowers the ability to get a loan from a local or national lender, there may be reasons to prefer one or the other. People with lower income or credit troubles may have an easier time getting approved for a mortgage through the FHA. However, FHA loans may have requirements that the seller pay a higher rate of closing costs, which may make sellers less likely to accept an offer from a buyer using an FHA loan.
FHA loans also typically have higher interest rates, representing a higher risk in lending money to people who cannot meet conventional mortgage loan requirements. It could be more difficult to get approved for a loan that will be purchased by Fannie Mae, but the lender may be able to negotiate with you on some of the details. Research lenders that offer a variety of loans and consider different loan products for your needs. One of those may be a loan insured by the FHA, or a mortgage backed by Fannie Mae.
Deciding on a mortgage loan calls for a lot of research and sometimes several different applications. With knowledge about the FHA, Fannie Mae and Freddie Mac, and with some assistance from a mortgage lender, banker or financial advisor, you can better understand what these organizations mean for your ability to qualify for and receive a mortgage loan that works for you.
#hw2016-11-02T08:56:00-07:002016-11-02T10:17:16-07:00Barry Adelmann