Saturday, November 22, 2014

Pros and Cons of Buying a House

There are many factors you should consider before you decide to rent or purchase your next home. Are you considering moving because of changes in your income, family size, employment, or simply for a more convenient living arrangement? Do you have the down payment saved to purchase a house? There are many advantages and disadvantages in buying a house. Are you looking to increase your living space, move to a more desirable location, add additional amenities, relocate to accommodate a recent job change, or decrease home upkeep responsibilities to free up more time for social activities? To help answer these questions, let's look at the main advantages of homeownership and the main advantages of renting.

The Advantages of Renting:

• Faster and Easier - Allows you to determine if you like a neighborhood before you commit to homeownership.

• In some markets, it is less expensive to rent the property than to purchase. This will depend on many factors including desired property location and the type of property.

• Fixed monthly expenses - Whereas homeownership has unexpected repair costs and upkeep.

• Less responsibility - Little to no maintenance of the property, and not responsible for property taxes.

• Mobility - You can easily move to another location.

The Advantages of Homeownership:

• Tax breaks - Homeowners have the benefit of writing off mortgage interest expense and deducting their property taxes (in most cases).

• Ability to update your property - Add living space, remodel, or simple re-paint.

• Potential appreciation/financial gain- In most markets houses appreciate at a nominal level annually. Of course, there is the possibility of your house depreciating.

• Stability - Rental agreements are typically annual, whereas homeowners have the luxury of living in a property for as long as they determine.

• Pride of homeownership

• Sense of security

• Privacy - In most cases, owning your own home will give you a higher level of privacy.

• Fixing your housing payments - If you choose a fixed rate your mortgage payment should remain constant (unless your taxes or insurance increase).

• Appreciating asset - If your house has equity in it, you can use the equity to pay off debt, go on vacation, and invest in a rental property.

Depending on your financial situation, employment, age, and as family obligations, and well as several other factors the choice to rent or purchase can be very confusing. Clearly listing your reasons to move and how the advantages of renting or purchasing meet your needs may be the best way to determine which is best for you.

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Wednesday, November 19, 2014

Pull the Trigger - Porter Report

In this weeks Porter Report, Jim goes over just some of the reasons why now is the time to go from renting to buying your primary residence

Sunday, November 16, 2014

What You Need to Know About Mortgage Rates

Mortgage rates involve a number of factors and it is helpful to have a better understanding of how they work before choosing a mortgage.

Mortgage Rate vs. Annual Percentage Rate (APR)

To put it simply, the mortgage rate is the rate of interest charged on a mortgage. In other words, it is the cost involved in borrowing money for your loan. Think of it as the base cost. Mortgage rates differ from the annual percentage rate (APR). The mortgage rate describes the loan interest only, while APR includes any other costs or fees charged by the lender. The US Government requires mortgage lenders to provide their APR through the Truth in Lending Act. It allows consumers to have an apples to apples comparison of what a loan will cost them through different lenders. Keep in mind that lenders may calculate APR differently and APR also assumes you will hold the loan for its full amortization so it is still important to carefully compare and consider when selecting a loan.

How is the Mortgage Rate Determined?

First, the Federal Reserve determines a rate called the Federal Funds Rate. The Federal Reserve Bank requires that lenders maintain a percentage of deposits on hand each night. This is called the reserve requirement. Banks will borrow from each other to meet their reserve requirements. When the Federal Funds Rate is high, banks are able to borrow less money and the money they do lend is at a higher rate. When low, banks are more likely to borrow from each other to maintain their reserve requirement. It allows them to borrow more money and the interest rate goes down as well. The interest rates fluctuate with the Federal Funds Rate because it affects the amount of money that can be borrowed. Because money is scarcer, it is more expensive.

Also, when the Fed decreases their rates, we tend to spend more. Because loans are more inexpensive, people are more likely to use them to invest in capital. Also, because interest rates are low, savings accounts are reduced because they are not as valuable. This creates a surplus of money in the marketplace which lowers the value of the dollar and eventually becomes inflation. With inflation, mortgage rates increase so the Fed must carefully monitor their rate to ensure that our economy remains level.

Basically, the Federal Funds Rate is a large determinant of what the mortgage rate will be on a given day. And the Federal Funds Rate is largely determined based on the market including factors such as unemployment, growth, and inflation. However, there is no single mortgage rate at a given moment that every borrower will pay. This is because there are also other factors which determine an individual's mortgage rate, and why they different people will have different rates.

Individual Determinants

There are several things that a lender can examine when determining your mortgage rate. One key factor is your credit score. A higher credit score makes you less risky to lend to and can significantly improve the rate you have to pay. You can also purchase "points" which are pre-payments on your loan interest. Speak with your lender to discuss points and how they might affect your loan. Finally, the amount of down payment can also change the interest rate. Typically, if you have more money up front, you have to borrow less, and you reduce the risk for the lender and your cost for the loan.

Mortgage rates are generally changing daily. Some lenders will stabilize their rates more than others, but it is always wise to compare rates between lenders at the same time and on the same mortgage type. It is also important to know that when a lender provides you with a rate, it is not a guarantee that tomorrow, the rate will still apply. Until you have chosen a mortgage and lock your rate in place with the lender, fluctuations can occur. As with any financial decision it is important to do your research and understand what you are getting into. It's always wise to consult with your lender for personalized advice.

Kathryn McDowell is a finance writer and recommends understanding mortgage rates and how they are calculated before you apply for a home loan. With this knowledge you can then make an informed choice and find the best terms and mortgage for your budget.
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Thursday, November 13, 2014

The Relationship Between Mortgages and Credit Scores

When seeking to qualify for a mortgage, a lender will look at a number of things before deciding to approve a loan. One of the key factors that lenders will use to decide if you qualify for a mortgage is your credit score. If you have a lower credit score that certainly does not automatically mean you can't secure a mortgage. There are often different types of mortgages that can help you. And other factors such as down payment amounts and interest rates can also improve the likelihood of being approved. It's always best to speak with your lender to discuss your unique situation. There are also a number of things you can do to improve your credit score relatively quickly.

About Credit Scores

A credit score is a three digit number between 300 and 850 that is calculated from a number of different pieces of data. FICO is an organization that takes into account your credit history and uses predictive analytics to assess the level of risk a lender assumes by borrowing to an individual.

Included in the types of credit information that is considered is one's payment history, amount of current debt, age of a credit history, the number of requests for credit, and the different types of credit an individual carries. The information is obtained from the three major credit reporting agencies which are Equifax, Experian, and TransUnion. They compile information provided by companies that have extended credit to an individual including banks, credit unions, retailers, and many other commercial lending companies.

Your credit score is determined by both positive and negative events in your credit history. The higher a score, the more likely the individual is low risk of default, bankruptcy, late payments, etc. The lower the score, the more likely there are risks for the lender because there is a history of negative events or a lack of past credit to review. You are able to check your credit score from the credit reporting agencies and it is usually recommended to review it regularly to make sure it is accurate. Negative events on your credit can be challenged if they are in error.

Relating to Mortgages

When shopping for a mortgage, your credit score is going to be one of the key factors determining what your mortgage will look like. It often has a large effect on the interest rate you will pay and can be a determinant in whether or not you will qualify. That means that there is no set minimum credit score, and why it is always important to discuss your options with a lender.

Generally, one of the first steps in finding a home should begin with obtaining your score and getting pre-approved for a mortgage. In addition to knowing where you stand financially and understanding the monthly payment and interest rate you will likely obtain have a large effect on the type of home you are able to finance. Also, by doing this early in the process, you will have more time to correct any incorrect reporting errors and take steps to increase your score before finding and making an offer on a property. And remember, even with a low score, there are still options available to you.

How to Improve Your Credit Score

Increasing your score is possible and if you are finding difficulty obtaining a mortgage or reducing your interest rate, it may be a good idea to do so before taking on a mortgage. The list below contains some common ways that credit scores are positively affected.

  1. Plan! Make sure you are in sound financial shape and determine if you can afford a mortgage. Remember to also include additional expenses such as property taxes, homeowners insurance, utilities, and maintenance
  2. Get a copy of your credit report and carefully examine it for any errors. If there are, file a dispute with the credit bureau.
  3. If possible, pay down as much of your debt as possible, but don't necessarily close your accounts. A lower debt to income ratio looks good and shows financial responsibility.
  4. While having a larger down payment doesn't necessarily help your credit score, it can help reduce your interest rate or ability to qualify for a mortgage.

Discuss with your lender any life events that attributed to a weak credit score. Lenders may be more willing to borrow to those who are generally responsible but had credit issues out of their control.

Kathryn McDowell writes to help educate her readers about the importance of the relationship between their credit scores and obtaining a mortgages. A low credit score does not necessarily take you out of the running, but understanding your options is vital when taking the first step in obtaining a mortgage.
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Monday, November 10, 2014

Is Hiring a Home Inspector Really Necessary?

Unless you have spent years building, buying and selling homes, chances are that you have minimal knowledge of the value of a home inspector. However, there are many homeowners who opt to risk buying a home without the information and assessment a home inspector can provide them with. In fact, studies on home inspections reveal the following:

The majority of home buyers (77%) had a home inspection prior to purchasing their home. Among these homebuyers:

· 81% had a contingency placed in the contract for the inspection.

· 79% attended and participated in the home inspection.

· 97% believe that the home inspection was a good value for the price they paid.

In addition, statistics reported by show that often buyers use a home inspector in home purchase is also based on age of home. Consequently, for homes that are 10 years or less old they use a home inspector 74% of the time; for homes that are 11 to 50 years old they will have an inspection 87% of the time and in home more than 50 years old, they still only call in an inspector 87% of the time.

But what exactly is the point of a home inspection? Is it merely a ploy to cause people to spend more money during the home buying process? How is an inspection going to improve the experience? Simply stated, the home inspection is there to protect the buyer first and the seller second. It allows the potential buyer to know exactly what they are getting if they pursue purchasing the house, and can also give them space to negotiate the price, should there be work needed on the house than initially anticipated. As part of a professional inspection, you can expect the home inspector to check the following:

· The overall structure should be inspected for any framing concerns, in particular areas around the sidewalks, driveway, steps, porches, foundation, windows and doors. Siding will also be checked for any loose, rotting or damaged areas. This will also include examining the fireplace and all its assorted parts and pieces.

· Your roof is one of the most critical areas of the exterior of your home as it protects you from the elements of nature. The home inspector will check for any buckled shingles, loose gutters and downspouts, drainage/leaking around skylights and chimneys as well as let you know what shape the existing roof is in.

· HVAC systems are one of the key elements for providing comfort, and can also be expensive to replace or repair. The inspection will reveal how efficient the existing HVAC system is working. This also means, determining any ventilation or insulation needs.

· Plumbing must also be inspected, as you need to know of any potential leak areas or previous leaks or updates to the home's plumbing.

· A home's electrical system needs to be in top working order. Homes where there is old or faulty wiring are more prone to electrical related fires. They will also check to see how efficient the outlets are, as well as the status of fuse box.

Having a home inspector check out a potential home for you and your family is not something to be ignored. It can help you make a wise decision and even save you money in the long run. Don't skip this step, when buying a home. It is definitely not the place to try to save money!

Many websites provide additional information on the topic of home inspections. One such site worth visiting is / Janet Slagell independently authors articles for, Inc. for search engine marketing. The views and opinions expressed in this article are those solely of the author, and not of any other person, company or organization. No guarantee or warranty, express or implied, is made regarding the accuracy, fitness, or use of the content herein.
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Friday, November 7, 2014

Using your VA Home Loan Benefit: Working with a Realtor and Lender

Real estate professionals help Servicemembers, Veterans and their families find suitable housing. They can help find local lenders who provide VA loans and advise prospective homeowners about obtaining a VA Home Loan based on their professional experience.