 |
|
 The addition of a home warranty in a home buying contract can be a very attractive thing. To buyers it means they’re protected if something happens to their appliances within the time frame of the warranty. For sellers, this investment might save thousands of dollars. However, tricky fine print and the age and functionality of the appliances in the home often leave people questioning if a home warranty is worth the price.
Home Warranties: If It’s Not Broken…
For new houses or homes with new appliances, heating and air conditioning systems, or with other recent repairs, the probability of a catastrophic failure occurring is very low. In these cases if something does need repair or replacing, it’s usually covered by a manufacturer or installer’s warranty. If this is the case, a secondary home warranty might not be necessary.
On the other hand, if there is less than a year on any particular warranty when you purchase the house, it might be a good investment. At the very lease it would be something to consider asking the seller to pay for as part of the purchase price. Should you decide to take the home warranty though, understand the process of making claims and what exactly the policy covers.
Read the Fine Print of a Home Warranty
Like all insurance policies, there are stipulations as to how you can use a home warranty. Some policies will only cover repairs versus full replacements, and some policies will only pay for replacements that fall in a certain price point. Find out if your policy allows you to choose the repair service, or requires you to go through the warranty company.
A home warranty can have its benefits for both buyer and seller, as long as you’ve done the research and know what to expect.
 Mortgage rates continued to improve last week marking yet another round of record breaking low mortgage rates. Last week also marked a continuation of previous themes in the market in regards to concern over the US Economy and the Weakness of European Markets, with Greece being the focus of concern, once again.
This week features multiple treasury auctions and traders will be watching the results of the Retails Sales and Producer Price Index data that is being released on Wednesday. This data will help them understand the state of consumer spending and inflationary pressures that might exist among producers. Any one of these events may impact mortgage rates negatively or positively.
Economic Calendar for Week of September 12, 2011
- Monday – Richard Fisher from the Fed Speaks
- Tuesday – Redbook, Treasury Budget
- Wednesday – Producer Price Index, Retail Sales
- Thursday – Consumer Price Index, Jobless Claims, Industrial Productions, Philadelphia Fed Survey
- Friday – Consumer Sentiment
Record Low Rates Are Here Now, But For How Long?
It is a given that rates will move up and move up fast, even from the record lows we are currently at. The big question is WHEN will they move up? The truth is that nobody knows. One thing is for sure though, you will be very unlikely to get in a lock fast enough once rates do move up, which means now is the time to capitalize on the record low rates that are available today. We can help you understand how this market can benefit you and which loan might be best for your current situation.
 In his White House Speech last night before a joint session of Congress, President Obama revealed his intent to help American homeowners refinance their mortgages to take advantage of the historically low rates we are currently seeing.
While President Obama did not touch on specifics, White House officials have said the U.S. Treasury was having talks with both Fannie Mae and Freddie Mac and their regulator, the Federal Housing Finance Agency, on potential ways to open up refinancing as an option for more Americans.
From the President’s Speech:
“To help responsible home owners, we’re going to work with federal housing agencies to help more people refinance their mortgages at interest rates that are now near 4 percent,” Obama said during his speech. He then signaled that said that such a move would “put more than $2,000 a year in a family’s pocketbook and give a lift to an economy still burdened by the drop in housing prices.”
Concern Moving Forward, Can This Work?
While the President’s intent is surely appreciated by many, there is concern about the ability of such actions to actually come to fruition. A prime example of government intervention that failed to achieve its intended goals is HARP, the Home Affordable Refinance Program launched in 2009. It was designed to allow homeowners that would normally not qualify with little to no equity in their homes to take similarly take advantage of low interest rates, with the requirement that they had loans backed by Fannie Mae or Freddie Mac. The goal of the program was to help “four or five million” home owners, but in reality only 838,000 homeowners had been helped as of June.
Do You Need Government Intervention or Can you Lock In A Low Rate Now?
If you are looking for the answer to this question, we can help. You may not need to wait and may be eligible now to lock in historically low mortgage rates now. If in doubt, please contact us for a free consultation where we can help you understand your options.
 Whether or not to pay off your mortgage early is a highly debated subject, some mortgage professionals say “no” while others in the industry say “why not?”.
The correct answer really depends upon a number of different factors. You need to evaluate what is most important to you before making a decision. Ensure that you consider the following first:
Factors to Consider When Deciding to Pay off Your Mortgage Early
- You Have Other Debt – Your mortgage is one of the lowest interest debts that you can possibly have. If you have other debts or loans outstanding then the logical thing to do is pay off those first.
- You Could Increase Your Retirement Contributions – Ideally, you want to get to a place where you are contributing the maximum amount possible to your retirement savings plan. If paying off your mortgage would allow you to do that, then it is something to consider.
- You Lack Liquid Assets – In today’s economy, having at least 24 months worth of living expenses saved is recommended. It is much easier to reach that goal when your home is fully paid for. However, you do not want to put all of your cash into your home to pay it off if you don’t have other assets available.
- The Debt Bothers You – Some people are okay with having the debt of a mortgage for the rest of their lives. They are happy to continue to upgrade to larger homes, even if it means never making significant strides with paying off the mortgage.
At the end of the day, paying off the mortgage on your home could be a smart choice, but you have to decide whether it’s the right choice for you as there truly is no right or wrong answer. We can help you look at your own financial goals and consider the above to make your decision.
 Many dream of owning their own home. With the proper preparation, you’ll be able to start your home search and find your perfect place with as little stress as possible. This is by no means a comprehensive list of ways to prepare for home buying, but it can be a step in the right direction.
Get Your Finances in Order
As gung-ho as you may be to start the home search, if you don’t know your budget, you’ll likely waste time looking in the wrong price point. A good first step in home buying is to talk to a lender about financing, and decide if it’s the right time for you to buy. Getting pre-approved for a home loan isn’t mandatory, but it allows you to not only know your budget, but can also help show you’re a serious buyer when the time comes to purchase. In other words, getting pre-approved is highly recommended.
Identify the Extra Costs Affecting Your Possible Home Purchase
Extra costs are a major part of the home buying process. It’s important to factor the possible costs of insurance, closing fees, and taxes into your budget. If you choose a house in a neighborhood that’s governed by a homeowners association, there will likely be extra HOA fees each month. Even extra costs for repairs should be factored into your budget, especially if you choose a home that needs a lot of work. Ask questions to be sure you are fully understanding the costs involved with a possibly transaction.
Home Inspections Are Mandatory!
Even if your seller makes it clear that they will not foot the cost of repairs, getting a home inspection is vital. You’ll be able to see if there are health and safety issues with the house, and you’ll know what needs to be fixed immediately instead of leaving it to chance. A home inspection is one of the smartest choices you can make in the home buying process.
 When you are putting your house up for sale in this tough economy, you are wise to not spend anymore than you have to when you are getting it ready to sell. However, to increase the chances of success for selling your home, it does still need to be in showing condition to impress potential buyers.
Budget-Friendly Home Improvements
Real estate professionals emphasize the importance of focusing on the following when preparing your home to show:
- De-clutter – With too many of your personal belongings in the home, potential buyers may struggle to picture themselves in it. They may also have trouble seeing some of the positive details with all of the distracting clutter.
- Fix the Visual Problems – Touch up paint that is chipping and fill in holes. If there are screens that are broken they should either be removed or replaced. Clean up grout in the bathrooms and re-caulk where necessary. These tasks will help ensure that your home doesn’t automatically create a red flag that there is work that needs to be done.
- Correct Issues that Will Audibly Tell buyers There Are Issues – This means that you need to lubricate squeaky doors and fix leaky faucets and running toilets.
- Modernize Cabinets – You don’t need to fully refinish cabinets, you can simply replace the hardware in your kitchen and bathrooms to spruce up their look.
- Clean Up Your Lawn – Make sure your lawn is well-manicured by cutting the grass, pulling out the weeds and pruning the trees.
When your potential profit may already be affected due to the current state of the market, you want to keep as much money in your pocket as possible. These changes can be made with a minimal investment and give you a better chance at a strong sale because appearances will help you win over prospective buyers.
 When buying a home using a real estate agent, you need to remain on the same team despite the stresses that can occur during the home purchase process. The agent you are working with can be your greatest asset as you go through the process and it is important that you keep all channels of communication open with them. It is rare that a real estate agent will fire a prospective buyer, but there are things that you can do that will insure your agent stays on your team and works hard for you.
Annoy your agent, and he or she may want to wash their hands of you as quickly as possible. Work with them and they will be happy to help place you in the right home.
Buyer Actions That Realtors Don’t Appreciate
Real estate professionals do not appreciate it when buyers do the following:
- Keep Them in the Dark – If you have a strategy as a buyer, tell them. Don’t spring any surprises on your agent as you want them to be able to appropriately advocate for you the whole time.
- Waste Their Time – If buying a home is not in your immediate future, do not monopolize your agent’s time. If you just want to get a feel for homes in a certain area, for example, let your agent know that is your intention. Most will be more than happy to show you a few properties, but they won’t spend additional time doing too much in-depth research and work if buying may not happen for a couple of years.
- Never Make an Offer – An agent can only spend so much time with you exploring the option of a home before an offer needs to be made. If you have a longer time frame in which you plan to make an offer, communicate this to the agent. Agents will be much more willing to work with you if they consider you an legitimate candidate to purchase a home. They can help you with questions you may have but it is important that you don’t misrepresent yourself as a potential buyer in the long run if that is not in fact the case and you don’t intend to make an offer.
Following these simple steps can help you negotiate for your potential future home more smoothly with a stronger advocate for your offer in your agent.
 The past weeks have seen mortgage rates break previous lows and set new record lows. These rates have been driven down by a slew of negative economic data that has has disappointed expectations. Additionally, the lack of leadership in Congress led to an embarrassing show over the debt ceiling, which played a role in S&P lowering the United States’ credit rating did its fair share of helping rates move down. Finally, weakness and uncertainty in European markets provided the final punch needed to move rates to all time record lows.
A Week Waiting For Ben, What Did He Say?
This week has been one marked by a market holding its breath, waiting for Federal Reserve Chairman, Ben Bernanke to speak this morning.
From Ben’s Speech (view speech here):
Normally, monetary or fiscal policies aimed primarily at promoting a faster pace of economic recovery in the near term would not be expected to significantly affect the longer-term performance of the economy. However, current circumstances may be an exception to that standard view–the exception to which I alluded earlier. Our economy is suffering today from an extraordinarily high level of long-term unemployment, with nearly half of the unemployed having been out of work for more than six months. Under these unusual circumstances, policies that promote a stronger recovery in the near term may serve longer-term objectives as well. In the short term, putting people back to work reduces the hardships inflicted by difficult economic times and helps ensure that our economy is producing at its full potential rather than leaving productive resources fallow. In the longer term, minimizing the duration of unemployment supports a healthy economy by avoiding some of the erosion of skills and loss of attachment to the labor force that is often associated with long-term unemployment.
Ben Also Remarked About the Negative Impact of Congress’s Behavior During Debt Ceiling Debacle:
The negotiations that took place over the summer disrupted financial markets and probably the economy as well, and similar events in the future could, over time, seriously jeopardize the willingness of investors around the world to hold U.S. financial assets or to make direct investments in job-creating U.S. businesses.
Summary of Ben’s Speech
- Economy isn’t deteriorating fast enough to warrant further stimulus. This is seen as being positive by some, if the market were in worse shape yet, further stimulus would be needed.
- Economic growth during the first half of this year was considerably slower than the Federal Open Market Committee had been expecting.
- Progress towards recovery is occurring albeit much slower than expected.
How Does This Affect Me and My Mortgage?
Rates are moving upward and away from record lows, which means now is the time to lock in a low mortgage rate while we are still near record low levels. Rates are expected to move very fast when they do make their push upward, so do not gamble with locking in savings now.
Tags: Ben Bernanke, FED, Mortgage News, Mortgage Rates
 In the ideal world, it would be possible to spend a few days or even a few weeks living in the home that you intend to buy before you close the deal. This would allow you to learn all of the pros and cons of the home as it pertains to your lifestyle. In reality, this is not an option in a conventional real estate transaction, but that does not mean you cannot get to know your prospective home before putting in an offer to buy.
Doing Your Homework is A Must
Do your due diligence before you purchase so you know if you and your family are truly well-suited for the home. The following will help you ensure you make the right decision:
- Scout Out the Neighborhood – To get a feel for the neighborhood, you can tour the area and take advantage of new technology that can give you more information to work with. Google Maps now offers a ‘street view’ feature that allows you to see satellite images up close. By looking at the street view you will be able to see how well the neighbors take care of their homes (which can affect your property value), if there are neighbors with pools, and more. These are things that you may not see when simply taking a quick tour of the area in person.
- Verify the Sound Levels – If your prospective home is near a busy street, visiting at various times per day will help you determine just how noisy it will be. Remember to open the windows, particularly in the bedrooms. Sometimes in the excitement of looking at a beautiful home, obvious steps like this can be overlooked.
- Speak to People That Live Nearby – Typically, new neighbors will tell you everything you need to know about the area and more once you move in. They may be equally as open if you just try to initiate a conversation before you purchase. If you don’t feel bold enough to approach the neighbors, visit local stores and speak with the staff.
Scouting out the area and doing some homework before you make an offer is the closest you can get to trying before you buy, and it can ensure that you are satisfied with your decision for the long-term.
 Last week set all time record lows for mortgage rates in the United States. Factors in rates moving lower and lower over the past few weeks have been disappointing economic data and uncertainty about the health of European markets and banks.
Since investors move money from equities into bonds in times of uncertainty, the end result is that mortgage rates just don’t get any better than where they are at. This means that the question is not if, but when mortgage rates will move up. The general expectation is that when they do move up, they will do so swiftly.
The Ben Bernanke Watch is On
All eyes are on Ben Bernanke this week, with the widely held expectation that he will announce additional measures to help stimulate the economy. Bernanke will be speaking on Friday at the Kansas City Fed conference in Jackson Hole, Wyoming. In a spooked and volatile market like this, the week ahead may very well be jumpy as rumor and speculation about what Bernanke may or may not say are likely to abound.
Economic Calendar for Week of August 22, 2011
- Monday – Global Central Bankers Conference
- Tuesday – Redbook, New Home Sales
- Wednesday – Durable Goods Orders
- Thursday – Fed Balance Sheet, Money Supply, Initial Jobless Claims
- Friday - Ben Bernanke speaks, GDP, Consumer Sentiment
|
 |
|
|
FREE Updates!
Connect on Twitter!
