The 6 Worst Mortgage Mistakes You Can Make

Is your house your castle? Or a monkey on your back?

The answer might depend on your mortgage. Getting an affordable property at a great rate can make you feel as if life couldn’t be any sweeter.

But ask anyone who bought a house with a mortgage they didn’t understand and couldn’t afford, and they will likely tell you their house has brought them nothing but frustration and tears.

If you’ll be in the market for a new place soon, make sure you avoid the following six mortgage mistakes.

1. Not reviewing your credit first

You’ll need your credit score to be in great shape if you want the best terms on a mortgage.

At least six months before you go to your first open house, go to AnnualCreditReport.com. That’s the official site where you can get free credit reports issued by the big three credit-reporting agencies: Experian, Equifax and TransUnion. You’re entitled to one free credit report from each agency annually.

When you get your report, identify and correct any errors before you apply for a mortgage.

Also check your credit score. Some banks and credit cards now offer the most widely used credit score, the FICO score, as a monthly perk for their customers. If your bank or card does not, check out this article, which offers more ways to get that all-important number for free.

If you find your credit score simply stinks, learn how to boost it fast by reading “Boost Your Credit Score Fast With These 7 Moves.”

Bottom line: Spend the time to get your credit in the best possible shape so that you can get lenders’ most favorable terms.

2. Failing to get preapproved

Getting preapproved by a bank for a given loan amount is one way to avoid the heartbreak that comes from falling in love with a house that is way out of your price range. It may also give you an edge if yours is not the only offer for the same property. A seller will feel more confident selecting a bid from someone with a mortgage preapproval rather than from a person who hasn’t begun the process.

However, don’t get carried away by the preapproval amount the bank gives you. Remember, what the bank thinks you can afford and what you can actually afford may be two different things. For more, check out, “Stop and Think: How Much House Can You Really Afford?”

3. Not shopping around for the best rate

The Consumer Financial Protection Bureau says nearly half of mortgage borrowers don’t shop around, and that’s a big mistake. Seasoned shoppers search for the best deals on soap, furniture and cars, but some fail to look for a better mortgage rate.

It may be convenient to use your primary bank for a mortgage, but that could also be expensive if its rates aren’t competitive. For instance, take a 30-year fixed-rate mortgage of $200,000: For every 0.25 percent you reduce the interest rate, you save about $28 a month. Over a 30-year period that can add up to a lot of extra cash.

Go to the Money Talks News Solutions Center and start comparing mortgage rates.

4. Ignoring mortgage fees

While you’re investigating rates, don’t forget the fees. Many mortgages come packed with fees of all kinds. Some — such as your county recording fee — are likely fixed, but others are negotiable.

Before your closing, you should be provided with a good-faith estimate of the fees. Ask your lender to review what they are for and then see if you can negotiate a lower price. These are a few of the fees likely to have the most wiggle room:

  • Loan origination fee
  • Application fee
  • Broker fee
  • Underwriting fee

5. Saving too little for a down payment

Not having a down payment stashed away can sink your prospects for getting a mortgage. After being bitten by the housing market crash, traditional lenders shy away from giving mortgages to those bringing nothing to the table.

You generally need to have a down payment of between 5 and 20 percent to qualify for a conventional loan. And if you put down less than 20 percent, be prepared to pay for mortgage insurance.

6. Not understanding your mortgage terms

Underwater mortgages weren’t the only problem homeowners faced during the Great Recession. An untold number of people also lost their houses simply because they signed on the dotted line without understanding what the heck their mortgage entailed.

For example, people thought they’d hit the jackpot with adjustable-rate mortgages, known as ARMs. Homeowners were fine for the first few years while their mortgage rate was fixed and low. But when it reset to the current market rate, that affordable monthly payment suddenly wasn’t so affordable.

The moral of the story is to always understand what you’re signing up for. It’s not enough to know what your monthly payment is today. You also need to ask if the interest rate can change and, if so, when and by how much it will increase.

If you’re not comfortable with the loan terms or don’t understand them, it’s better to walk away than to make an expensive and potentially life-altering mistake.

Freddie Mac August Forecast: Housing Affordability Challenges Slowing Home Sales Growth

MCLEAN, Va., Aug. 27, 2018 (GLOBE NEWSWIRE) — Ongoing supply and demand imbalances and weakening affordability conditions, particularly in markets out West, are expected to keep a lid on home sales growth through the rest of the year, according to Freddie Mac’s (OTCQB: FMCC) August Forecast.

The U.S. economy in the second quarter grew at its fastest pace in nearly four years, but housing activity played a limited role in the expansion. New home construction, existing-home sales and sales of new homes all declined last quarter, as homebuilder challenges, limited inventory and steady price gains created headwinds for the housing market.

Looking ahead to fall, Freddie Mac expects market conditions to remain mostly the same, with a modest rise in housing starts slightly easing inventory constraints. Total home sales (new and existing) for the year are now forecasted to increase 0.2 percent, and home price growth – which has softened somewhat in recent months – is still anticipated to rise 6.0 percent.

“The housing market hit some speed bumps this summer, with many prospective homebuyers slowed by not enough moderately-priced homes for sale and higher home prices and mortgage rates,” said Freddie Mac Chief Economist Sam Khater. “These challenges were predominantly seen in expensive markets out West, where demand and sales are beginning to dampen because of weakening affordability.”

Added Khater, “The good news is that the economy and labor market are very healthy right now, and mortgage rates, after surging earlier this year, have stabilized in recent months. These factors should continue to create solid buyer demand, and ultimately an uptick in sales, in most parts of the country in the months ahead.”

Forecast Highlights

  • The robust labor market and healthy U.S. economy, forecasted to grow 2.8 percent this quarter and 2.7 percent for the year, should continue to boost consumer spending and business investment.
  • Mortgage rates jumped earlier this year, but have remained mostly flat since late May. Looking ahead, they are expected to gradually trend higher and average 4.60 percent for the year.
  • Limited inventory continues to affect home sales and prices. Total (new and existing) home sales are now forecasted to increase only modestly this year to 6.14 million, while prices are expected to moderate, but still at a pace well above inflation.
  • Slower home sales growth, as well as decreased refinance activity due to higher mortgage rates, are expected to cause single-family first-lien mortgage originations to slide around 8 percent this year to $1.66 trillion.

Freddie Mac makes home possible for millions of families and individuals by providing mortgage capital to lenders. Since our creation by Congress in 1970, we’ve made housing more accessible and affordable for homebuyers and renters in communities nationwide. We are building a better housing finance system for homebuyers, renters, lenders, investors and taxpayers. Learn more at FreddieMac.com, Twitter @FreddieMac and Freddie Mac’s blog FreddieMac.com/blog.

Booms Are Back In These 25 Real Estate Markets

Denver, Colorado. (Shutterstock)

Many investors like real estate because of the potential for steady, above-average returns with only a limited downside risk. Others, however, are more intrigued by the possibility of a quick strike in a real-estate boom, holding a property for a short time as values rise and magnifying their return with leverage from a mortgage or other low-cost loan.

Boom markets don’t come along very often in real estate. There haven’t been any since the big crash of 2008, and before that, they were usually limited to one or two places at a time, like Houston in the mid-1980s, New York later that decade or Southern California in the early 1990s.

But booms are back, with some already well under way and a good number in the early stages. Home building lagged almost everywhere in the last decade while strong economic growth has pumped up demand for housing in many local markets, creating the imbalance that drives a boom.

The 25 markets listed below are mainly in the early stages of a boom, even though home prices have already been rising at a brisk pace. Denver is the exception, with prices already into boom territory.

www.LocalMarketMonitor.comLOCAL MARKET MONITOR

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At Local Market Monitor, we identify potential boom markets by calculating how much the current average home price is above the local “income price.” When that margin is greater than 15%, a boom is possible. You can see that our calculations range from 16% for Asheville and Sacramento to 47% for Denver. This is a metric we have been monitoring for over 25 years, and it has proved to be extremely reliable at identifying booms and busts in advance.

The importance of identifying a boom market is that home prices in a boom take on a life of their own, increasing at a high rate for several years, with jumps of 10-15% a year quite likely. Obviously, if you invest at the early stage of a boom, you can expect a big increase in value in just a few years.

The markets in our list have three characteristics that support a run-up in prices during the next few years.

  • They’re already over-priced compared with the income price (no longer “recovering”).
  • The average home price increased at least 8% last year.
  • And with the exception of West Palm Beach, the local economy has been strong, in many cases adding jobs well above the 1.6% national rate.

What kind of investment can you make in these markets? It’s got to be one you can quickly exit in a few years. Single-family is always easiest, and if you’ll be renting out, stick with short leases. Rehab for immediate resale is a good strategy, maybe staging several properties at once. Apartment buildings or existing rentals are lesser choices because they probably won’t have the same appreciation.

Miami, Florida. (Shutterstock)

Note that the Price/Rent ratio is well above 20 in most of these markets, which means that fewer renters are able to pay what you would normally want. You’re really just renting the property for extra return, not the main reward, so don’t hold out for top rental dollar because you may not get it.

Now let’s talk about risk. We identify boom markets for their investment potential but also to identify where the risk of investing is higher than normal. Boom markets are risky markets. The more home prices move above the income price, the riskier a market gets. Denver is already a riskier market than Asheville. In the boom that preceded the 2008 crash, prices in some markets were more than 60% higher than the income price — and subsequently fell by that amount and more. You don’t want to be holding a property past the peak of a boom.

Local Market Monitor also forecasts home prices. We forecast that prices will rise briskly in all 25 of these markets over the next three years. But the risk for investors increases in boom markets along with the prices.

What can end a boom? In Houston back in the 1980s, it was a drop in oil prices. In 2008, it was sub-prime mortgages. These days it could be a trade war, an economic crisis, a political crisis, a real war.

How to protect yourself: If home price increases drop off — from 9% a year to 5%, let’s say — sell. If you wait for the peak, you’ll find few buyers, maybe none.

And maybe you shouldn’t even wait that long — it takes time to sell a property. Maybe just set a reasonable appreciation goal and sell when the market hits that.

source: https://www.forbes.com/

U.S. Home Values Are Rising at Their Fastest Pace in 12 Years

National home values have increased 8.7 percent since last April to a median value of $215,600, according to Zillow.

The rise in home prices has allowed more people to take cash-out of the homes when they refinance. Refinancing, where the home owner took additional cash out, rose to 61 percent in the first quarter — the highest rate seen since the third quarter of 2008, according to FHFA data.

The pace of appreciation seen by Zillow is the fastest since June 2006, when home values were rising nine percent annually.

San Jose home values appreciated 26 percent year-over-year. Las Vegas, Seattle, Dallas-Fort Worth, San Francisco, Tampa, Atlanta, Charlotte and Orlando all saw double digit a growth.

“The spring home shopping season has been a perfect storm of strong demand and tight supply,” said Zillow senior economist Aaron Terrazas. “Sluggish new construction has exacerbated the supply situation and homes that are hitting the market, are moving very quickly once they do. Americans are also in a spending mood, boosted by recent tax cuts and rising wages.”

In 21 of the 35 largest housing markets, home values have surpassed levels reached during the height of the housing boom over a decade ago.

source: https://www.bloomberg.com/news/articles/2018-05-24/u-s-home-values-are-rising-at-their-fastest-pace-in-12-years?utm_source=yahoo&utm_medium=bd&utm_campaign=headline&cmpId=yhoo.headline&yptr=yahoo

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US sales of new homes slipped 1.5 percent in April

US sales of new homes slipped 1.5 percent in April

FILE- This May 4, 2018, file photo shows a house is under construction in Roseville, Calif. On Wednesday, May 23, the Commerce Department reports on sales of new homes in April. (AP Photo/Rich Pedroncelli, File)

WASHINGTON (AP) — Sales of new U.S. homes fell 1.5 percent in April, held down by a shortage of affordable houses in the most desirable areas and sharp pullback in purchases in the western United States.

The Commerce Department said Wednesday that new homes sold last month at a seasonally adjusted annual rate of 662,000. Despite the setback, new-home sales so far this year are 8.4 percent higher than in 2017.

A solid job market and a shortage of existing homes for sale have led more people into the new home market, even though they are generally more expensive than existing homes. Sales last month occurred disproportionately at the higher end, where profit margins are often greater for builders.

Momentum in the U.S. housing market has overcome even a supply shortage because mortgage rates remain near historic lows. But average mortgage rates have been climbing in tandem with higher rates throughout the economy, reaching a seven-year high of 4.61 percent on a 30-year loan, according to mortgage buyer Freddie Mac.

In April, new-home sales tumbled 7.9 percent in the West and were essentially unchanged in the Midwest and South. Sales improved 11.1 percent in the Northeast. The new-home sales figures are often volatile on a monthly basis and are often revised.

The median sales price of a new home rose 0.4 percent from a year ago, to $312,400. But that masks a broader change last month, which was more sales at luxury prices levels.

Ten percent of new homes purchased in April cost more than $750,000 — twice the percentage of homes bought last year in that range. As a result, the average price of a new home in April shot up 11.3 percent from a year ago, to $407,300.

source: https://finance.yahoo.com/news/us-sales-homes-slipped-1-140457520.html

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US sales of new homes shot up 4 percent in March

Sales of new U.S. homes jumped 4 percent in March, propelled by a surge of buying in the West.

The Commerce Department said Tuesday that sales last month were at a seasonally adjusted annual rate of 694,000. The two prior months had their sales revised upward with the annual rate being 667,000 in February and 644,000 in January. For the first three months of 2018, sales are running 10.3 percent higher than a year ago.

Homebuyers are snapping up newly built houses as the economic outlook has continued to improve in recent months. Nor have the gains been derailed so far by 30-year mortgage rates climbing to their highest averages since early 2014.

Still, the solid sales growth for new homes also shows that many would-be buyers can’t find existing homes that are available to purchase. Listings for existing homes sank to the lowest levels on record for March, the National Association of Realtors reported on Monday.

New homes tend to cost more than older properties. The median sales price of a new home rose 4.8 percent from a year ago to $337,200, a nearly $87,000 premium on the median cost of an existing home.

Prices for a new home are increasingly concentrated at higher price points. In 2016, 53 percent of new homes cost more than $300,000. That figure climbed to 60 percent for new homes sold in March.

The March increase was driven almost entirely by a 28.3 percent leap in sales in the West. New-home purchases rose slightly in the South, fell in the Midwest and plunged in the Northeast. The new home sales report can be volatile on a monthly basis, causing the numbers to be revised later.

source: http://www.foxnews.com/us/2018/04/24/us-sales-new-homes-shot-up-4-percent-in-march.html

Freshen up your home for spring with these 7 steps

Whether it’s obvious by the weather, spring has sprung. As temperatures thaw, it’s also the perfect time to tackle those home improvement projects you’ve been putting off.

Lacking direction or don’t know where to start? These seven steps will help start your spring with a fresher home inside and out.

1. Install new house numbers  

Though they’re a small detail, house numbers can increase your home’s charm. A prime first impression for new visitors, your house numbers will be the first thing guests seek out when navigating to your address. So keep them fresh to boost your house’s curb appeal.

2. Paint your front door

Residential Front Door Of A Georgian House In Dublin

The front door can be your home’s most prominent first impression.  (iStock)

For those who glaze right over the house numbers, your front door will be a more prominent first impression. The centerpiece to your home, your front door can set the tone for the entire house. Bold colors are all the rage now. But regardless of the color, adding a layer of paint will make your whole home look freshened up. Learn how to paint your door here.

3. Deep clean

Shot of a handsome mature man and his daughter mopping the floors in their home as part of their spring cleaning

To get the deepest clean, follow steps like dishwashing vent covers, hosing down area rugs and using lots of baking soda.  (iStock)

You never realize how dirty something was until you see it clean. Deep cleaning your home can make your walls, floors and décor look brand new. To get the deepest clean possible, follow these steps from homehacks, like dishwashing vent covers, hosing down area rugs and using baking soda in more places than you ever thought you could.

4. Make the backyard your favorite escape

Quick fixes like oversized plants, DIY seating, an outdoor bar and a cohesive theme will transform your backyard from an extra grassy space to the perfect spot for both solitude and entertaining. These ideas from Lonny might spark your creativity.

5. Build a plant wall

Botanical living room with grey sofa, green pillows and bookcase

Give your home a wall of succulent boxes, framed moss or contemporary plant stands to usher in spring.  (iStock)

A vertical garden not only looks clean and modern, but also ups the air quality in your home. Whether you install succulent boxes, mount some framed moss or hang contemporary plant stands, the extra greenery will make your home instantly look alive and ready to usher in the season.

6. Paint ugly countertops

Can’t stand the look of laminate countertops? Before you shell out thousands of dollars for new ones, try a quick fix that will hold you over for a few years. With these step-by-step instructions, you can transform your laminate to look like woodstone or even granite.

7. Update hardware

Close up image depicting an antique oak cabinet with many drawers and many unique knobs of different colors and patterns. Room for copy space. Image taken on mobile device.

For a creative twist, try installing a statement knob or handle on a select cabinet door.  (iStock)

New kitchen and bathroom knobs are the easiest facelift a home can get. Spring offers the perfect chance to finally fix mismatched kitchen metals or update dated and worn-out handles and doorknobs. For a creative twist, try installing a statement knob or handle on a select cabinet or door.

RD Training Systems Is Coming to Orlando, Florida in April 2018

Rick Kurtz and RD Training Systems are bringing their real estate training to Orlando, Florida this coming April 2018.

ORLANDO FLORIDA,  — Rick Kurtz and RD Training Systems are bringing their real estate training to Orlando, Florida this coming April 2018. This groundbreaking real estate training is to help professional agents stay up-to-date and on the top of many competitors. This training will give the participants a lot of good tools that can help them become a thriving result. There are a lot of things to be expected during the meeting, including high power and minute-to-minute content-rich presentations. Rick Kurtz, the speaker, focuses on proven systems which are made by Realtors for Realtors.

This seminar will teach real agents how to run a real estate business.

If you would like to know how to come to this or any of our other events, please don’t hesitate to reach out and let us know.

Call us today at (844) 454-8787 or visit our website at http://rdtrainingsystems.com.

As real estate agents, we are constantly inundated with offers of training to improve upon our existing business plans from marketing to the service we provide. With all that we have to choose from, it can be a wild west of uncovering what will be of the most value and deliver us the most up to date and effective strategies. All of this while also anticipating what is next going to be at the forefront of the real estate industry.

Downsizing your home: How to determine if a smaller house is the right move

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PM Images | Getty Images

Tim and Tracey Kerin knew it was time to downsize soon after their grandson Maximus was born.

“We started to re-evaluate what’s important to us at this stage in life and decided that our health and family were more important than a larger home with a big backyard and pool,” says Tim, 58, who along with Tracey, 59, operate a commercial cleaning and construction business.

Last December, the Kerins packed up a two-story colonial replete with a beautifully landscaped garden in Damascus, Maryland, and moved to New Smyrna Beach, Florida, near their sons Justin, 35, and Jason, 33, and their families. And of course, they get to see Maximus, now 2. “We usually see Max a couple of times a week, and he spends one night every weekend, which we look forward to,” Tim says.

The Kerins are not alone in their quest for a simple life centered on happiness. According to a recent TD Ameritrade Survey, 42 percent of preretirees are likely to downsize if they haven’t done so already. Some 25 percent of respondents are moving to a warmer climate, and 17 percent are relocating closer to loved ones.

Another critical consideration is cost. “Retiring with a lower mortgage payment, property tax bill, smaller place to clean and maintain can be attractive,” says Dennis LaVoy, CFP of Telos Financial in Plymouth, Michigan.

Run the numbers

Before downsizing, homeowners should run the numbers to make sure it makes financial sense.

“Look at costs associated with selling the primary home, such as preparing the house for sale, agent’s commission, moving and buying a smaller home to get an idea of the fixed costs to relocate,” says Aaron Galileo, senior loan officer at Investors Home Mortgage in Howell, New Jersey.

Once a person decides to downsize, he or she must keep lifestyle in mind. “You need to save as much as you can for retirement to keep your lifestyle intact,” says Jeff White, a financial analyst at FitSmallBusiness.com. “If you can lower your monthly mortgage payment from $2,500 for the big home to $1,200 per month for a nice condo that fits you and your spouse, why not leap and invest the extra $1,300 into your retirement plan?”

Consider the space you need

The amount of space you have may also influence your decision to scale down. “If the kids have moved out and you’re an empty-nester, do you need all of that space?” asks Brian Graves, co-founder of Everything But the House, an online estate sale marketplace. He says factor in how much space you need based on your family dynamic and the frequency of out-of-town guests.

For some homeowners, maintaining a property, especially an older one, is no longer attractive. That was the case for Sean Dougherty, age 51, and his wife, Juliana V. Atinaja-Dougherty, 56. In February, they moved into a two-bedroom, two-bath apartment in Manhattan after living for more than 20 years in the 2,000-square-foot single-family ranch house in Clifton, New Jersey, where his wife grew up. “The house was run down in small, but noticeable ways, and we kind of lost the emotional energy to fix it up for sale, so we priced it to sell,” says Sean, a senior vice president at a public relations firm, and Juliana, an attorney. “Plus, we always wanted to move back to New York at some point, and having reached a point where we are more financially comfortable, it made sense.”

Factor in cost-of-living changes

Part of their decision was doing the math and figuring out they could afford to do it, especially given that the move to New York would increase their cost-of-living expenses substantially thanks to the rent they now pay. The other part was wanting to enjoy the entertainment and cultural experiences of big-city living.

“In my case, I wanted to do more in New York like seeing friends, taking in a Broadway show or going to a book reading without worrying about the frustrating commute back to New Jersey,” Sean says. Even still, they are happy with the move. “I put a ceiling on what we could afford, and I could still keep my job as my wife plans to retire soon,” Sean says.

His best advice for those thinking about downsizing: “Don’t wait too long. It’s easy to live in the status quo of your life, but then you deny yourself other experiences.”

source: https://www.cnbc.com/2018/04/09/downsizing-your-home-how-to-determine-if-a-smaller-house-is-the-right-move.html

 

Home Prices in 20 U.S. Cities Advance More Than Forecast

A limited number of properties for sale against a backdrop of steady demand helped keep home prices elevated in January, according to S&P CoreLogic Case-Shiller data released Tuesday.

HIGHLIGHTS OF HOME PRICES (JANUARY)

  • 20-city home-price index increased 6.4% y/y (est. 6.2%), after rising 6.3% y/y
  • National gauge of home prices rose 6.2% y/y
  • Seasonally adjusted 20-city index advanced 0.8% m/m (est. 0.6%)

Key Takeaways

Home prices continue to post solid gains across the country, with the largest advances occurring in the West. While demand is being spurred by robust job growth, inventory remains lean and is allowing sellers to raise asking prices. The number of previously owned houses on the market during the month was the lowest for any January in National Association of Realtors’ records back to 1999.

Higher property prices and mortgage rates near a four-year high, however, are putting a dent in affordability. New-home sales have declined for three straight months, according to government data released Friday, while first-time buyers of previously owned houses made up a smaller share of total purchases in February.

Economist Views

“The home price surge continues,” David Blitzer, chairman of the S&P index committee, said in a statement. “Two factors supporting price increases are the low inventory of homes for sale and the low vacancy rate among owner-occupied housing.”

Other Details

  • All 20 cities in the index showed year-over-year gains, led by a 12.9 percent increase in Seattle and an 11.1 percent gain in Las Vegas
  • After seasonal adjustment, Seattle, San Francisco and Atlanta had the biggest month-over-month gains
  • Washington has the smallest month-over-month advance at 0.2 percent

 

source: https://www.bloomberg.com/news/articles/2018-03-27/home-prices-in-20-u-s-cities-advance-more-than-forecast