support, Author at Mike Pfefferman

16

Feb

Mortgage

Why Should One Consider Refinancing Their Mortgage Now?

Why Should One Consider Refinancing Their Mortgage Now? Refinancing a mortgage is a golden opportunity to lock in today’s low interest rate for the next 15 or 30 years. While interest rates now are still low, there’s a good chance they may be heading up in the coming months.

The Fed may not maintain the current bond purchasing level forever, and any changes that the Fed makes will likely affect mortgage interest rate levels.

As interest rates remain near low for 30 and 15 year mortgages, homeowners can benefit greatly from a refinance. Several types of people in particular should consider refinancing.

Carrying a high rate

Anyone with an interest rate well above today’s level should think about a refinance. Unless the homeowner is planning to sell within the next few years, a refinance will almost always save money in the long run if the rate can be lowered by at least a percent.

Switching from FHA to conventional

Given that FHA mortgages now carry mortgage insurance premiums for the life of the loan, it makes a lot of sense for borrowers to switch away from them when they can. Refinancing may be possible once the homeowner has built up enough equity to qualify for a mortgage from a traditional lender, without the burden of mortgage insurance.

ARM coming up on adjustment

The low rate of an adjustable rate mortgage may not stay low beyond the first few years of the mortgage. After this point, the rate adjusts each year based on market trends. Rather than paying the adjusted rate, which is almost always higher, homeowners can refinance into a new fixed rate mortgage to lock in one of today’s low fixed rates for the duration of the mortgage.

Cash out to consolidate debt

Homeowners carrying high-interest debt, like credit cards and personal loans, can often benefit from consolidating it into their mortgage. As long as they maintain at least 20 percent equity in their home, they can get a cash-out refinance for an amount higher than their current mortgage balance. They can then use the difference to pay off high-interest debt.

15

Feb

By support

Around The Home

4 Home Improvement Shortcuts That Can Lead to Disaster — and How to Avoid Them

4 Home Improvement Shortcuts That Can Lead to Disaster -- and How to Avoid Them Are you starting to get the renovation itch? With spring on the way, you might be tempted to launch those home improvement projects that you contemplated over the winter. However, as with any project, you will want to get things right. Let’s take a look at four renovation shortcuts that can lead to disaster and the steps you can take to avoid them.

Shortcut #1: Not Understanding Your Home’s Structure

Before you undertake any renovation involving your home’s structure, you must be confident that you know exactly what is where. For example, do you know what is inside of your walls? You might be surprised to learn what is hiding behind those pieces of painted drywall. Electrical wiring, plumbing, structural supports, insulation and possibly even soundproofing material can all be damaged by misplaced nails or cuts. You might also discover damage caused by pests, mold or water which needs to be repaired.

Shortcut #2: Not Measuring Everything (At Least) Twice

You have likely heard this tired cliché: “measure twice, cut once.” However, what you may not realize is that was intended for professionals. If you are new to renovating, you will want to measure at least twice, if not three times or more. A small measuring mistake of one-half-inch can mean the difference between your new cabinets fitting and not fitting. Or your tiles lining up with one another or not.

Shortcut #3: Not Using Quality Tools And Materials

Another shortcut that homeowners try to take when starting do-it-yourself home projects is using cheaper materials or whatever tools they have handy. Keep in mind that you are investing in your home and that you are saving money by not paying for the labor. Use those savings on top-quality materials that will withstand the test of time.

Shortcut #4: Not Calling A Professional After You Mess Up

Finally, one shortcut that must be avoided at all costs is not calling a professional if you have made a significant mistake. If you end up drilling into the wrong wire, or you damage something else beyond your repair skills, don’t try to patch it up. Swallow your pride and make the call. You will be able to sleep soundly knowing that whatever was damaged isn’t at risk of failing later.

Renovating your home is the best way to increase its value, but even the smallest mistake can blow up into a major problem in the future. To learn more about your home’s value, contact us today.

13

Feb

By support

Mortgage

What You Need to Know About Mortgage Insurance

Homeowners insurance and title insurance may not be the only kinds of insurance you need when you buy a home. Many buyers also have to purchase mortgage insurance, which lenders require for mortgages with a down payment of less than 20 percent. Take the time to understand what you’re buying and how long it will affect you.

Mortgage Insurance Protects the Lender

Most types of insurance will pay you if you make a claim. Mortgage insurance, though, is solely for the lender. If you were to stop making payments and the lender foreclosed on your home, the mortgage insurance would pay the lender the difference between the profit from selling your home and the amount you still owed on your mortgage.

Types of Mortgage Insurance

When you have a mortgage with a traditional lender, you get private mortgage insurance, often abbreviated PMI. This insurance is provided by a third party, although your lender will typically dictate who provides the insurance. When you get an FHA mortgage, the federal government provides the mortgage insurance and you pay mortgage insurance premiums, often abbreviated MIP.

Mortgage Insurance Amount

You can generally expect to pay 0.5 percent to 1 percent of your loan balance each year for private mortgage insurance. FHA mortgage insurance premiums are set by the federal government, and as of 2017, are 1.75 percent of the loan balance up front, plus 0.45 percent to 1.05 percent of the loan balance each year, depending on the type of loan.

How to Stop Paying Mortgage Insurance

FHA loans have mortgage insurance until the loan is paid off, either through regular payments or by refinancing. Traditional loans automatically cancel mortgage insurance when you have reached the point on your amortization schedule where the loan balance drops below 78 percent of the purchase price. You also may be able to apply to cancel mortgage insurance as soon as your loan balance is less than 80 percent of your home’s current appraised value.

How Can You Get Around Paying Mortgage Insurance?

When purchasing a home, the only way to avoid having to buy mortgage insurance is to get a mortgage for less than 80 percent of the home’s purchase price. However, the cost of mortgage insurance may be something you’re willing to pay for the opportunity to buy now without a down payment of 20 percent.