First Rate Financial Group, Author at Mike Pfefferman

25

Jul

Mortgage

Financial Considerations When Buying a Home

Financial Considerations When Buying a Home Purchasing a home is one of the most significant financial decisions many individuals make in their lifetime. It involves a substantial investment of money and requires careful consideration to ensure long-term financial stability. To navigate the complexities of the home-buying process, it’s essential to be well-informed about the various financial considerations involved. In this blog post, we will explore key factors to consider when buying a home to help you make informed decisions and achieve financial success.

Establishing a Realistic Budget:

Before diving into the home-buying process, it’s crucial to establish a realistic budget based on your financial situation. Consider factors such as your income, existing debts, credit score, and other financial obligations.

Saving for a Down Payment:

Saving for a down payment is a significant aspect of buying a home. Lenders typically require a down payment, which is a percentage of the home’s purchase price. Saving for a substantial down payment not only reduces the overall loan amount but also helps secure better mortgage terms, such as lower interest rates. Aim for a down payment of at least 20% to avoid private mortgage insurance (PMI) and decrease your monthly payments.

Understanding Mortgage Options:

Explore different mortgage options to find the one that suits your financial goals and circumstances. Common types of mortgages include fixed-rate mortgages, adjustable-rate mortgages (ARMs), and government-insured loans. It’s essential to carefully evaluate interest rates, terms, and potential risks associated with each type before deciding.

Considering Closing Costs and Additional Fees:

In addition to the down payment, be prepared for closing costs and other fees associated with purchasing a home. Closing costs typically include expenses like appraisal fees, loan origination fees, title insurance, and attorney fees.

Evaluating Long-Term Affordability:

While you may be able to afford the monthly mortgage payment currently, it’s essential to consider long-term affordability. Consider potential changes in your income, lifestyle, and expenses. Ensure that you have a realistic understanding of how your finances may evolve over time, accounting for future goals like starting a family, education expenses, and retirement planning.

Assessing Property Taxes and Insurance:

Property taxes and homeowners’ insurance are ongoing expenses that come with homeownership. Research the property tax rates in the area where you plan to buy a home and include them in your budget.

Maintaining an Emergency Fund:

Owning a home comes with unforeseen expenses, such as repairs, maintenance, and unexpected emergencies. Aim to have three to six months’ worth of living expenses set aside in an easily accessible savings account.

Getting Pre-Approved for a Mortgage:

Before house hunting, consider getting pre-approved for a mortgage. This process involves a lender reviewing your financial situation and creditworthiness to determine the amount they are willing to lend you. Pre-approval provides a clear understanding of your budget, strengthens your bargaining position with sellers, and speeds up the closing process once you find your dream home.

When buying a home, making well-informed financial decisions is crucial for your long-term financial well-being. Remember to evaluate long-term affordability and maintain a financial cushion to handle unexpected costs. By following these financial considerations, you’ll be better prepared to embark on your homeownership journey and achieve financial success in the long run.

24

Jul

By First Rate Financial Group

Market Outlook

What’s Ahead For Mortgage Rates This Week – July 24th, 2023

What's Ahead For Mortgage Rates This Week - July 24 2023 Last week’s economic reports included readings on U.S. housing markets, housing starts, and building permits issued. Sales data for previously-owned homes were also released along with weekly readings on mortgage rates and jobless claims

Home Builder Confidence Ticks Up in July

The National Association of Home Builders reported a one-point gain in home builder confidence with an index reading of 56 for July. Analysts predicted a reading of 57 and June’s reading was 55. Readings over 50 indicate that most home builders are confident about current U.S. housing market conditions. Overall homebuilder confidence rose for the seventh consecutive month in July.

Component readings of the Home Builder Confidence Index were mixed as builder confidence in current housing market conditions rose by one point and builder confidence in housing market conditions over the next six months fell by two points. Buyer traffic in new home developments rose by three points. The lack of previously-owned homes for sale boosted buyer interest in new homes. Homebuilders surveyed indicated that they are not offering as many buyer incentives as they did during the pandemic.

While home builder confidence remained positive, issues including shortages of buildable lots and slim supplies of electrical transformer equipment presented potential obstacles to builders’ positive outlook. Mortgage rates near 7 percent also presented concerns for home builders, but most prospective buyers appear to have accepted higher rates. In related news, the Commerce Department reported 1.43 million housing starts in June as compared t the expected reading of 1.48 million starts and May’s reading of 1.56 million housing starts.

Fewer building permits were issued in June with 1.43 million permits issued as compared to expectations of 1.48 million permits issued and May’s reading of 1.50 million building permits issued.

Mortgage Rates and Jobless Claims Fall

Freddie Mac reported lower average mortgage rates last week. The average rate for 30-year fixed-rate mortgages fell by 18 basis points to 6.78 percent, The average rate for 15-year fixed-rate mortgages dropped by 24 basis points to 6.06 percent.

Jobless claims fell with 228,000 first-time claims filed as compared to the previous week’s reading of 237,000 initial jobless claims filed.

What’s Ahead

This week’s economic reporting includes readings on U.S. home prices, sales of new homes, and pending home sales. The Federal Reserve will publish its decision on raising its key interest rate range. Fed Chair Jerome Powell is expected to give a press conference after the interest rate announcement. Weekly reports on mortgage rates and jobless claims will also be published.

21

Jul

By First Rate Financial Group

Home Buyer Tips

What is a Home Warranty?

What is a Home Warranty A home warranty is a type of service contract that provides coverage for repairs or replacements of major systems and appliances in a home. It typically covers items such as heating and cooling systems, electrical systems, plumbing, water heaters, and kitchen appliances.

Home warranties are purchased by homeowners to protect against unexpected expenses for repairs or replacements that may occur due to normal wear and tear.

When a covered item breaks down, the homeowner can contact the home warranty company, which will send a qualified technician to diagnose and repair the issue. If the item cannot be repaired, the home warranty company will typically replace it with a similar model.

It is important to note that home warranties are not the same as homeowners’ insurance. Homeowners insurance covers damage to the structure of the home and personal belongings due to unexpected events such as fires, storms, or theft. Home warranties, on the other hand, cover the repair or replacement of items due to normal wear and tear.

What’s generally included in a home warranty?

The items that are typically included in a home warranty can vary depending on the specific plan and provider, but they generally cover major systems and appliances in a home that are subject to normal wear and tear. Some of the most common items included in a home warranty are:

Heating and Cooling Systems – This typically includes coverage for furnaces, heat pumps, air conditioning units, and ductwork.

Electrical Systems – Issues with your home’s electrical system can be expensive and dangerous. Having these covered makes sure that your home stays safe. This includes coverage for the main electrical panel and wiring throughout the home.

Plumbing Systems – Just like electrical repairs, plumbing issues often require a professional and can cause major problems if not fixed right away. Having these things covered by a home warranty will cut repair costs and includes coverage for the water heater, pipes, and drains.

Kitchen Appliances – This includes coverage for the refrigerator, oven, dishwasher, and built-in microwave.

Laundry Appliances – This includes coverage for the washer and dryer.

Garage Door Opener – This includes coverage for the garage door opener and related components.

It’s important to note that while these items are typically included, each home warranty plan is different, so it’s important to read the details of the plan to understand what is and is not covered. Additionally, there may be optional add-ons available for specific items or systems that are not covered under the basic plan.