Tag Archives: financing

Cash Always Wins When Selling Your House

Have you been thinking about selling your home for a while now and finally are ready to take the leap? When buyers are looking for a home, there are many options they can choose from to finance the home. In the majority of instances, buyers will be taking out a mortgage on the property to cover the cost of it. Mortgages come in all sizes and styles so well-qualified buyers will have many options to choose from. If the buyer of your home is in a position to pay for your home with cash, there can be some additional advantages to selecting a cash buyer for your home over one who will need to secure a mortgage. Here are three reasons to keep your fingers crossed that your next homebuyer will have cash in the bank to cover their purchase.

  1. One of the most challenging parts of buying a home can be the inspections, especially if the home is less than perfect. Is your home a fixer upper or does it have any kind of major flaw? Inspections can reveal all kinds of problems and if the buyer is getting a loan on a property, the lender may require that certain repairs be made to ensure the property meets their lending criteria.
  2. Like inspections, an appraisal is required when a buyer is getting a mortgage. The lender will require the home to be worth at least as much as they are paying for it. If your property is in an area with climbing values and you were fortunate enough to have multiple offers on your home, the contract price may have escalated beyond your home’s market value. If the appraisal doesn’t come in as high as the price the buyers agree to pay for your home, they won’t be able to get a loan for the property unless they have cash to make up the difference.
  3. If you are hoping to sell your home super-fast, a cash buyer can make that happen in weeks or sometimes even days. Selling a home doesn’t have to stretch out for months. It is the lenders that generally make that happen while homes are in underwriting. Selling a home to a cash buyer can be a quick and easy process.

Understand that the number of cash buyers in the home buying market is smaller than others but if you have a cash buyer interested in your home, you may want to negotiate differently with them since the process will likely be smoother. If your property has flaws, searching for a cash buyer may be the only way to go and can help you ensure your property closes. If you have any additional questions or concerns about selling your home, I will be happy to answer any questions you may have, help you to find your dream home and/or determine the value of your existing property.

 

Nancy Davidson
Mammoth Village Properties
760 937-2301 mobile
nancy@mammothcountry.com
www.MammothCountry.com
CA Broker’s License #01264041

Nancy Davidson is your ultimate real estate resource for Mammoth Lakes, CA and The Eastern Sierra. Visit my website for detailed information regarding today’s real estate markets.

Image by NikolayFrolochkin from Pixabay 

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What Will 2020 Bring in the Real Estate Market?

As we finish 2019 and start 2020, there are always many questions about what the coming year will bring. The real estate market is no different. Will 2020 bring appreciation or deprecation of home prices, fluctuation in mortgage interest rates, increase or decrease in building and what is expected regarding the amount of activity in the housing market? It’s impossible to know for sure but here are some predictions for 2020.

Freddie Mac’s latest forecasts predicts that mortgage rates should remain at ultra-low levels in 2020 and even 2021, hovering around 3.8%. 2019 saw significant mortgage refinancing with rates so low. The number of homes sold in 2019 is expected to reach around 6 million with slight increases each year through 2021. Home pricing won’t drop but the appreciation rate is expected to slow with current annual growth finishing 2019 around 3.2% and dropping slightly to 2.9% in 2020 and 2.1% in 2021.

Redfin’s latest forecast expects the first half of 2020 to see an increase in homes that receive competing offers due to increased demand brought on by low interest rates and rising tenure. This will bring increased prices, which will lure other sellers to the market and help the market inventory levels balance out towards the end of 2020.

Overall expectations trend positive but there are several sources including Zillow that predict 2020 will bring the start of the next recession. Recessions are cyclical and are impacted by many factors in the economy, but housing can play a key role in the determination of a recession. The next recession isn’t likely to see housing at the center like the last one, but an overall weakened economy will impact the housing market as well if employment, spending and interest rates see changes.

Lawrence Yun, Chief Economist with the National Association of REALTORS® predicts prices will appreciate between 3 and 5% in 2020. Builders continue to start more homes but are still unable to keep up with current demand. This will be felt stronger in low to mid-priced homes as millennials are currently approaching 50% of the current market activity.

Predictions are always uncertain and never exactly right due to many variables but overall expectations for 2020 anticipate mostly positive news coming out of the real estate market. If you are ready to talk about applying a strategy to your long-term real estate goals, contact me today so we can determine how to make the most of the current real estate market for you. I will be happy to answer any questions you may have, help you to find your dream home or determine the value of your existing property.

 

Nancy Davidson
Mammoth Village Properties
760 937-2301 mobile
nancy@mammothcountry.com
www.MammothCountry.com
CA Brokers License #01264041

Image by Steve Buissinne from Pixabay 

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What is PITI?

When you are buying a house, there will likely be many things you don’t know even if it isn’t your first time buying a house. Don’t let this discourage you. Just ask questions of your real estate agent so you can be sure to understand exactly what is happening. Early in the home buying process, you are likely to hear your mortgage lender and your real estate agent mention PITI. What in the world does this have to do with buying a house? PITI is an acronym for your mortgage payment that includes Principal, Interest, Taxes and Insurance. This is commonly referred to during the mortgage application process as your lender is determining your credit ratios and making sure your income and loan amounts fall within their underwriting guidelines.

When your mortgage lender is calculating your PITI, the yearly amount of money to cover taxes and insurance on your home are put into escrow and divided by twelve, then added to the principal and interest to make up your total mortgage payment. The “P” in the acronym refers to the principal of the mortgage.  This is the total amount of money borrowed from the lender to make your monthly payments.  With each payment made, a portion of the principal is paid off and there is a gradual decrease in the outstanding balance owed.  Over the life of the mortgage, the principal component of each payment towards the outstanding balance starts out very small and gradually increases so you are paying more money toward the principal each month. As the principal payment amount slowly increases with each payment, the equity in your home increases.

The first “I” in PITI stands for interest and is a charge from the lender in order to borrow the money to purchase your home.  Initially, the largest part of your mortgage payment will go towards the payment of interest.  There are a variety of interest types yielding a variety of rates.  Your lender will assist you in determining which interest type and rate is best for your needs.

Taxes “T” are the next section of the PITI acronym.  These are property taxes that will be paid to the county and city where your property is located. First, the property is given a market value which is determined based on the assessed value of your home and paid into your mortgage’s escrow account each month so your lender can pay it when your taxes are due. The tax on market value can change based on any new property reassessments.  However, major home improvements, such as home additions, will trigger a reassessment consequently increasing the tax levied dependent on the added market value.

The final “I” in PITI represents your homeowner’s insurance cost. This insurance is important to both the homeowner and the lender.  As the homeowner, you are protecting your investment from fire and other disasters. The lender is utilizing the insurance to protect their investment of lending you the money.  The insurance guarantees repayment of their loan should any calamity threaten their collateral.  In the majority of cases, lenders require homeowner’s insurance to be carried as a condition of the mortgage.  There are multiple carriers of homeowner’s insurance, thus shopping around for rates is highly recommended.

All of these items together total your PITI and will make up your mortgage payment each month. When you are applying for a mortgage, your lender will let you know this amount, so you know what to anticipate your mortgage payment to be each month. For additional information, reliable recommendations to trusted affiliates or to arrange a meeting to discuss your needs, please contact me today for a consultation. I will be happy to answer any questions you may have about the home buying or selling process, help you to find your dream home or determine the value of your existing property.

 

Nancy Davidson
Mammoth Village Properties
760 937-2301 mobile
nancy@mammothcountry.com
www.MammothCountry.com
CA Broker’s License #01264041

Nancy Davidson is your ultimate real estate resource for Mammoth Lakes, CA and The Eastern Sierra. Visit my website for detailed information regarding today’s real estate markets.

Image by OpenClipart-Vectors from Pixabay 

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Preparing to Apply for a Mortgage

Your home will likely be the largest purchase you ever make. Because it is a large purchase, very few people are able to buy a home without getting a mortgage. A home mortgage is a long-term commitment and as such, the lender will perform a very thorough check on your financial situation before they commit to loaning you money. If you are ready to buy a home and will be applying for a mortgage, here are some things you can do now to help you prepare.

Start by checking your credit reports. There are three major credit reporting agencies and you should check all of them as they could have different information on your reports especially if there is a mistake. You are allowed to check your credit report once a year for free. The main reason to check your credit report is to look for errors. If you see something that isn’t right, notify the credit agency so it can be corrected. You may find things on your report that you have forgotten about. If there are accounts you are no longer using, don’t close them right now as that can lower your credit score, but you might want to take care of them later after you buy a new house.

Cleaning up your credit report may raise your credit score if you find errors, so this is a very important first step. Your credit score will be a factor when determining the interest rate you get on your mortgage so if there are mistakes that are lowering your score, handling them could raise your score and potentially save you thousands of dollars in interest over the life of your mortgage.

If your credit score is not where you want it to be, the best thing you can do to improve it is to make all of your payments on time. Continue to do this after you purchase a home as this is the most important factor on your credit report.

Prior to applying for a mortgage is not the time to make other large purchases. Your credit score is calculated by comparing how much credit you are using compared to how much credit you have. If you are making a significant purchase, that ratio will change and could possibly change your credit score. If your credit is less than perfect, don’t assume you can’t get a mortgage. Talk to a lender to determine if you can get a mortgage now and if not, a good lender will advise you on what you need to do to improve your credit score so you can buy a home sooner rather than later.

If buying a home is one of your upcoming goals, these are important steps that will help make sure you get approved for a mortgage without waiting forever. For additional information regarding the home buying process, I will be happy to answer any questions you may have, help you to find your dream home or determine the value of your existing property.

 

Nancy Davidson
Mammoth Village Properties
760 937-2301 mobile
nancy@mammothcountry.com
www.MammothCountry.com
CA Broker’s License #01264041

Nancy Davidson is your ultimate real estate resource for Mammoth Lakes, CA and The Eastern Sierra. Visit my website for detailed information regarding today’s real estate markets.

Image by Clker-Free-Vector-Images from Pixabay 

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How Big Should Your Down Payment Be?

Just like houses, down payments come in all shapes and sizes. If you are in the market to purchase a home, your down payment will be an important part of this. Different types of loans have different requirements and as long as you meet the minimum requirements for your loan, you can choose to make a larger down payment if you want to. How do you know how big your down payment should be and what’s best for your personal financial situation?

This isn’t a decision you will just make. Take the time to sit down with your mortgage lender and let them educate you on the different loan options and the down payment required by each. Your circumstances may dictate the kind of loan you qualify for and if so that will be one less decision you must make during the home buying process but you still need to take a little time to understand the terms of your loan and everything that goes along with that. Historically, many mortgage loans have required a 20% down payment to purchase the home but there are other options you may qualify for.

Reasons to Make a Larger Down Payment (20% or More)

  • The bigger your down payment, the more risk a lender will be willing to take on you. Depending on your credit history, this could mean the difference in being approved or denied. If you have blemishes on your credit history, a down payment of 20% or more will put the lender more at ease increasing the chances of having your loan approved. 
  • Private mortgage insurance (PMI) is required when you have less than 20% equity in your home. While PMI allows you to purchase a home with a smaller down payment, it can be expensive and will cut into the amount you can spend on a home by taking up some of your monthly housing budget. With a down payment of 20% or more, you can avoid paying PMI and use that savings to pay more on your mortgage payment each month, maximize your buying power or for anything else you choose. 
  • The larger the down payment you make, the lower your monthly payment will be. Likewise, if you are trying to stay within a monthly budget amount, a larger down payment will allow you to purchase a more expensive home if you choose to without your mortgage payments being bigger than you want them to be.

Reasons to Make a Smaller Down Payment (Less than 20%)

  • The biggest advantage to a smaller down payment is the ability to buy a home sooner if you don’t have enough savings for a 20% down payment. The amount you save in rent will be significant over the time it would take you to save for a 20% down payment. 
  • Making a larger down payment could mean missing out on other opportunities and take away a significant amount of your savings that you might could use for something else.

Overall, the advantages to making a larger down payment when buying a home are greater than the disadvantages but it really depends on your personal situation. Sit down with your trusted mortgage lender and determine the best long-term solution for you. For additional information regarding the home buying process, I will be happy to answer any questions you may have, help you to find your dream home or determine the value of your existing property.

 

Nancy Davidson
Mammoth Village Properties
760 937-2301 mobile
nancy@mammothcountry.com
www.MammothCountry.com
CA Broker’s License #01264041

Nancy Davidson is your ultimate real estate resource for Mammoth Lakes, CA and The Eastern Sierra. Visit my website for detailed information regarding today’s real estate markets.

Image by PublicDomainPictures from Pixabay 

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How Large Should the Down Payment on Your Home Be

How Large Should the Down Payment on Your Home BeIf you are planning to buy a house, there is so much you will need to figure out before you start looking at homes and ultimately make an offer, sign a contract and close on your new home. Just one thing to consider is the amount of down payment you will make on the home you buy. Many people will tell you that you need a minimum of 20% of the purchase price of the home to put down before you even consider buying a home. While a 20% down payment is common, there are low down payment mortgages available meaning you may be able to put as little as 3 or 5% down and still qualify for a mortgage.

There are some advantages to making a larger down payment on a home. When you have less than 20% equity in the home you purchase, you will be required to carry PMI (private mortgage insurance) and this can cut into your housing budget. This insurance will protect your lender should you default on your mortgage and offers no protection to you. It is paid as part of your mortgage payment so there isn’t a way to get around having it. The lender will remove this from your payment once you build a certain amount of equity in your home but that may take time and you can spend a good bit of money on PMI for years before you are able to stop paying it.

A larger down payment will also look good to the lender if you have had credit problems in the past. Even if your credit issues were years in the past, lenders may be hesitant about approving you for a loan. A larger down payment can help that since you are committing a larger amount of money toward building equity in your home, which means you are less likely to miss a payment on your mortgage. If your home goes into foreclosure, the mortgage holder would receive any equity left in the home after it was sold meaning you would lose the money you made as a down payment plus any additional equity you built up making monthly mortgage payments. A 20% down payment just might be the difference you need to get the loan approval you want.

Interest rates can vary and the lender might be willing to give you a slightly lower interest rate with a larger down payment. While the interest rate difference may only be as much as an eighth or quarter of a percent, when you are borrowing hundreds of thousands of dollars, this can still provide significant savings over the life of your mortgage. The instant equity you have in your home with a larger down payment might also be beneficial if you were to need to borrow money in case of any emergency.

What if you decide not to make a 20% down payment or you don’t have the savings for a down payment that large. Should you wait and save money for possibly years to be able to purchase a home? In today’s market, home prices are appreciating in almost all areas meaning a couple years of delay could cost you tens of thousands on the purchase price of a home if you have to wait several years to buy. Depending on where you live and the size of your family, you may also throw away thousands upon thousands of dollars on rent until you are able to save up enough money for a 20% down payment.

There is not a right or wrong answer to this question. The best thing to do when deciding what is best for your situation is to talk with a mortgage professional or financial advisor to determine the best solution for you and how they can help you reach your goals. For additional information regarding the home buying process, I will be happy to answer any questions you may have, help you to find your dream home or determine the value of your existing property.

 

Nancy Davidson
Mammoth Village Properties
760 937-2301 mobile
800 421-7005 office
866 278-7765 efax
nancy@mammothcountry.com
www.MammothCountry.com
CA Broker’s License #01264041

Nancy Davidson is your ultimate real estate resource for Mammoth Lakes, CA and The Eastern Sierra. Visit my website for detailed information regarding today’s real estate markets.

Image courtesy of klhh/pixabay.com


 

Should You Pay Off Your Mortgage Before Retirement?

Should You Pay Off Your Mortgage Before RetirementIf you are getting close to retirement, you may be asking yourself if you should pay off your mortgage before you officially retire. There is a lot consider and the decision will likely be different for everyone but don’t wait to start thinking about it when retirement comes. Start evaluating your options now and discuss your situation with professionals to determine the best plan of action for you.

The first thing to consider is what your source of income will be during retirement. Social security, 401Ks, IRAs, pensions and other investments are all common sources of retirement income. Calculate what you anticipate you will receive each month and then compare that to your current monthly expenses. If you will have enough retirement income to continue living as you have been, your decision may be a little easier. If your income will not cover all your expenses, you will need to determine how to adjust your budget to meet your needs. Even if your retirement savings will cover your expenses, you may still decide to make some changes so retirement can truly have the carefree lifestyle you are looking for.

After you have evaluated what your income will be during retirement, take a look at your current available funds and current obligations. Do you have enough funds available to cover your current obligations without it being a burden? Would you have to withdraw money from investment accounts to cover your current obligations? Once you have sorted out all the facts regarding your finances, you will need to start weighing the pros and cons to determine what is best for you. Here are a few things to consider.

  • If you have other debt besides a mortgage, pay it off first. Most current mortgages carry pretty low interest rates and chances are good that any other debt you have has a higher interest rate than your mortgage.
  • If you would have to withdraw money from investment accounts that would charge you penalties, make sure the penalties won’t cost you more than its worth. With a mortgage generally carrying a very low interest rate, paying that interest may cost significantly less than penalties involved with other accounts you may want to withdraw money from to eliminate your mortgage debt.
  • If you have cash on hand that isn’t tied up and might be drawing very little interest, you may want to strongly consider using that to eliminate your mortgage.
  • Though paying off your mortgage can eat up a lot of your cash that you may have saved for emergencies, having a home equity line you can access if needed may allow you peace of mind to feel comfortable doing this.
  • Another thing to consider if you still owe money on your home and don’t have the funds to pay it off or it’s too difficult to access is selling your home. You may be ready to downsize giving you less to take care of and a lower mortgage or none if you are able to purchase the home sans mortgage with the proceeds after you sell your current home.

There is no cookie cutter answer to determine what is best for you. Talk to professionals that can advise you what is best from an objective perspective and it may make your decision a little easier. For additional information, reliable recommendations to trusted affiliates or to arrange a meeting to discuss your needs, please contact me for a consultation. I will be happy to answer any questions you may have about the home buying or selling process, help you to find your dream home or determine the value of your existing property.

 

Nancy Davidson
Mammoth Village Properties
760 937-2301 mobile
800 421-7005 office
866 278-7765 efax
nancy@mammothcountry.com
www.MammothCountry.com
CA Broker’s License #01264041

Nancy Davidson is your ultimate real estate resource for Mammoth Lakes, CA and The Eastern Sierra. Visit my website for detailed information regarding today’s real estate markets.

Image courtesy of geralt/pixabay.com


 

3 Things to Do if You Plan to Purchase a Home Soon

3 Things to Do if You Plan to Purchase a Home SoonIf buying a home is part of your plan for 2018, there are some simple things you can do before you really start home shopping. These items are not part of the formal home buying process but will ensure you are prepared when the time comes.

  1. Check your credit score. Even if you always pay everything on time, there may be something on your credit score you don’t know about. Don’t leave this to chance because it is a very important piece of the process if you will be getting a mortgage. When you check your credit report, review it for any errors or accounts you were unaware of. If you will be getting a joint mortgage with another person, make sure you check both of your credit reports. There may be something you forgot about from the past or even mistakes that you can get corrected if you know about them before the last minute.
  1. Find a professional real estate agent to look out for your best interests and guide you through the home buying process. People work with real estate agents for a variety of reasons. Maybe you drove by a house you liked and called the person on the sign, found someone when you were browsing online or have a friend that sells real estate. While none of these are the wrong way to find a real estate agent, they may not provide you with the best agent for you. Think about it this way, if you needed a cardiologist, would you just call the person on the sign or would you research your options and pick the one with the best experience and knowledge to help you with your condition? Real estate is no different. All agents aren’t created equal. A good way to find a agent is to talk with friends or coworkers and ask who they have used. If they were happy with their experience, call that agent and talk to them about your needs. Make sure they know the area you are interested in well and have the experience you need to help you should any problems arise. This is not a one size fits all business so make sure the agent you choose has the best approach for you.
  1. Start cleaning out stuff. If you are buying a new home, you will be moving soon, and do you really need to move boxes of things that you will never use. If you are holding on to things that you don’t use anymore, now is the time to purge. This doesn’t mean you have to get rid of everything but if you are holding onto things you haven’t touched in years, let them go.

Once you are ready to officially start your home search, there will be many more things you need to accomplish. The agent you select will guide you through this process, so you can achieve your goal of purchasing a home in 2018. I will be happy to answer any questions you may have regarding buying a home, help you to find your dream home or determine the value of your existing property

 

Nancy Davidson
Mammoth Village Properties
760 937-2301 mobile
800 421-7005 office
866 278-7765 efax
nancy@mammothcountry.com
www.MammothCountry.com
CA Broker’s License# 01264041

Nancy Davidson is your ultimate real estate resource for Mammoth Lakes, CA and The Eastern Sierra. Visit my website for detailed information regarding today’s real estate markets.

Image courtesy of cafecredit.com/flickr


 

Selecting the Best Mortgage Terms

Selecting the Best Mortgage TermsWhen buying a home, probably the most important decision you will make will be regarding your mortgage. Your mortgage lender will be a great source of information when it is time for you to decide. Go ahead and discuss your financial situation with your lender and get a preapproval letter. This letter will indicate the basic terms of your mortgage such as interest rate and repayment term.

So you are prepared when you meet with your lender, here are some pros and cons for the different mortgage options that are currently available.

30-year term

This is the most popular mortgage type and offers you 30 years with a fixed interest rate to pay off your mortgage. You will have a lower payment each month than if you financed your mortgage for 15 years. Because the term of the loan is so long, there is a greater risk to lenders, so you will pay a higher interest rate than with a 15-year loan. In addition, over 30 years, you will spend a lot of money in interest. Your interest is often tax deductible depending on your tax situation, so this may still be a low to no cost way to finance your home.

15-year term

The overall mortgage works the same as a 30-year mortgage, but the principal is amortized over 15 years instead of 30 years. Because the term of the loan is shorter, there is less risk to the lender and therefore they offer a lower interest rate. In addition, paying the mortgage loan off in half the time will save you lots of money in interest. On the flip side, because you are paying off your loan in half the time, your monthly payments will be higher. Depending on the value of the home you plan to purchase, this may or may not be something you can afford to do. Even if you can afford this option, you may decide to get a 30-year loan, so you have more funds available each month to use at your discretion.

ARM

ARM (adjustable rate mortgages) are not very popular right now because mortgage rates are so low, but they are still an option. They work very similar to the traditional mortgage, but the interest rate can be adjusted at different intervals throughout the mortgage. For the lender, if interest rates rise significantly, they are able to adjust your rate in the future and as the owner of the property if rates drop significantly, your interest rate might decrease at some point. Because interest rates have stayed relatively low in recent years, this is no longer a popular option and doesn’t offer significant savings over the current fixed rates. If you are in the jumbo mortgage range, the savings over a fixed rate loan are a little more so you may want to consider this.

Overall, there is a lot of thought that should go into your mortgage decision. Your mortgage terms are stuck with you for the long term unless you refinance or sell your home, so you definitely want to take the time to ask good questions and make the best decision for you. If you don’t have a mortgage lender, contact me and I will be happy to introduce you to select professionals that will deliver excellent service, as well as help you to find your dream home or determine the value of your existing property.

 

Nancy Davidson
Mammoth Village Properties
760 937-2301 mobile
800 421-7005 office
866 278-7765 efax
nancy@mammothcountry.com
www.MammothCountry.com
CA Broker’s License #01264041

Nancy Davidson is your ultimate real estate resource for Mammoth Lakes, CA and The Eastern Sierra. Visit my website for detailed information regarding today’s real estate markets.

Image courtesy of stylva/flickr.com