Choosing a Real Estate Appraiser
If you plan to finance your home through a bank or other lender, you’ll more than likely need to get the property appraised first. Banks and most lenders want to know the value of the home for your protection, as well as make sure that the home they are financing is worth the total amount that you take on the loan.
The appraisal usually indicates that the home meets or exceeds the asking price. In some cases however, the appraisal will come back saying the home is worth less than the asking price. If this happens, the buyer normally has to either drop the deal or try to negotiate with the seller to get a price that meets the appraisal.
When you are buying a home, one appraisal can make or break the deal. Even if you're not financing your purchase through a lender or a bank, you should still get the home appraised and find out the true value. You should also make a point to find the best appraiser you can afford. If you hire an appraiser who isn’t that experienced, you’ll pay for it later when you discover the property isn’t worth what you paid for it.
When you look for a real estate appraiser, look for someone who comes highly recommended. Ask family and friends for their opinions, or search local papers, ask your real estate agent, even search the Internet. If you take your time and search for the best real estate appraiser that you can find – you’ll normally get an appraisal that is right on target.
If you have a question or comment about real estate appraisers, post it below by using the comment link.
Mortgage Reform Unlikely in 2007
Homeowners unable to pay monthly mortgage bills and facing foreclosure shouldn't count on help from Washington this year. Regulators and lawmakers seem to be taking a wait-and-see approach as they confront the fallout from several years of lenders making too many home loans to people with inadequate credit.
The foreclosure rate nationwide is rising at an annual rate double that of two years ago. Nearly 2 million adjustable-rate mortgages are forecast to reset at higher rates over the next two years, suggesting the foreclosure rate has not peaked.
Federal lawmakers and regulators say they are balancing how to make sure high-risk borrowers can still get loans against efforts to rein in abusive lending practices.
We'll keep you posted here on anything new that might help if you're struggling with, or facing, possible foreclosure.
Lower Home Sales and Prices Predicted
A real estate industry trade group said recently it expects sales of existing homes to drop 4.6% this year to 6.2 million. Two months ago, the group had predicted a 2.2% decline for the year.
The National Association of Realtors (NAR) is now forecasting sales of new homes to drop 18.2% to 860,000 compared with an earlier estimate of a 14.2% decline.
The NAR also predicts the median price of existing homes, which make up about 85% of the market, will fall in 2007 for the first time since the 1960s, when the group began keeping records.
The predicted decline comes after a 1% gain in home prices last year and an increase of more than 12% in 2005. Next year, though, the NAR expected the market to rebound, and existing home prices are forecast to rise 1.7%.
What a lot of home buyers don't realize is… NOW is the best time in years to find a home. When the real estate market is red hot and all these figures are reversed, it's not the best time to be buying real estate. So if you've been putting off buying a new home because of all the negative news lately.. think again. NOW is the time to start your search before the market turns around.
House Hunting Strategies
There are many factors to consider when looking to purchase a home - from what neighborhood to which floor plan and much more. Let's review 4 things you should keep in mind when looking for a home.
1. Location, location, location.
A house needs to be near what's important to you and your lifestyle. How important is it to you that your home is close to your office? Is it more important to you that you're close to a good medical center or a convenient grocery store?
2. The house.
Does the floor plan meet your needs? Does it have enough room for your family to grow if future growth is in your plans? Think of buying for the long term and consider whether the house meets your needs, not just now, but any future needs you can anticipate. And don't discount your gut feeling. If this home doesn't feel like home to you, then move on.
3. Affordability.
Getting pre-qualified for a mortgage before you begin visiting homes is the best way to know what you can afford. Often people fall into the trap of looking first, and falling in love with a home that's well out of their price range. Only look in whatever price range you can pre-qualify for.
4. Resale.
As much as you like the idea of seeing you and your family growing old and gray in your new home, chances are you won't. Most people don't live in their house even for the full term of their mortgage. When home shopping, keep in mind that at some point you will probably want to put your home on the market, so don't compromise. If you decide a house has some aspect that you can overlook, you need to be aware that someone else may not feel the same way. When home shopping, choose a house that is not only appealing to you, but is also likely going to appeal to others down the road.
Interest Only Loans - Can You Afford Them?
Interest-only and deferred-interest mortgages are gaining increasing popularity, as homeowners like the idea of having the freedom to decide how much to pay against their mortgage each month. Interest-only loans offer you the option to pay only the monthly interest, or you can pay the monthly interest and as much of the principal as you'd like. Deferred-interest mortgages give you even more choices. In addition to the payment options of an interest-only mortgage, a deferred-interest loan also allows you to pay just a portion of the interest payment each month (the unpaid interest would then be added to your principal loan balance).
To help you decide how much home you can afford, it's smart to think in terms of an interest plus principal payment each month. If you can only afford the minimum payment on your mortgage, you may be overextending yourself. Having a choice to pay only the minimum is quite different than only being able to afford the minimum.
Is an interest-only or deferred-payment mortgage right for you? If any of the following situations apply to you, these loans may be just what you've been waiting for:
- If you need cash flow and have a low interest rate, paying interest only is the same as borrowing money at a great rate.
- If you're paid on commission or depend on tips, and your income fluctuates month-to-month, interest-only or deferred-interest payments are great. When commissions are down, make the minimum payment. When you have an excellent month, pay the full payment or more.
- If you invest the money you don't put toward your mortgage in something with a higher rate of return. For example, if you pay 6.5 percent on your mortgage but find an opportunity to make an investment that returns 9 percent, you will make 2.5 percent on your money that you wouldn't make if you had paid your full principal plus interest.
- You have higher interest debt to pay off. Again, if you have credit card debt at 15 percent, it makes dollars and sense to pay that before mortgage interest debt at 6.5 percent.
- If you expect to be in your home for less than 10 years.
- If you live in an area with appreciating home values. Regardless of what you've heard, most of the country is still appreciating in value. In those areas, even if you pay mostly just interest on your home, you're likely gaining equity in your home. In some cases, you can gain equity even with deferred-interest minimum payments.
Make sure your mortgage professional goes over all the numbers and fully explains the payment scenarios. Don't assume anything. Get real numbers and you'll make the best decision.
