Posts Tagged ‘mortgage’

Buying a House? Now Might Be The Time

I was reading a Yahoo! Finance story this morning about housing prices and saw that for the first time in a long time, prices might be falling. Are you looking for a house? Now might be the perfect time.

HouseinaBox

What’s happening with the housing market?

Let’s talk first about the market. You definitely don’t want to buy a home when the market is hot….and the trend is in a seller’s favor. But if prices are dipping and the number of people buying is light, you’re more likely to find a steal. However, real estate markets are very much regional, not national, like the stock market. That means that while prices might be tanking in Las Vegas, they could be rising in Miami. It’s important to check with pros in your area to see just how weak your local market is before wandering off into the home buying scene.

A weak market means more desperate sellers, so do brush up on your negotiation skills. A few thoughts on this front:

  • Remember that the seller isn’t your friend. It’s up to them to put their best foot forward and make their best deal.
  • You aren’t trying to “put the screws” to someone when you negotiate. You’re only trying to adequately protect your interest, which means paying as little as possible.
  • Don’t expect your real estate agent to negotiate on your behalf. Studies have also shown that real estate agents prefer not to negotiate (mostly because when you consider how they make money….on the sale price….there’s no real incentive for them to bargain).

Okay, the market might be right, but should I buy?

(more…)

How Can I Decide Which Mortgage is Best?

TreeHouseThis week I want to focus on debt. Why? Many people have debts, but few have a debt strategy. If you’re going to focus on your craft, you should minimize distractions with confusing terms and high repayment options.

The biggest debt for most people is their mortgage, so we’ll start there.

Here’s some good news: mortgages don’t have to be ominous, and if you do them wisely, you can come out ahead on your mortgage decision.

Let’s start with what a typical mortgage looks like and then we’ll talk about money-saving strategies. (more…)

5 Tales of Financial Horror

I know Halloween was last week, but let’s keep the fun alive with some financial horror stories. Didn’t you love horror stories as a kid? I liked them…until I tried to sleep. Then, more often then not, I spent the night staring at the ceiling, sure that at any minute some disconfigured arm would grab me from under the bed.

 

The bad news is that we all have friends who have real life financial horror stories. Their money problems make it difficult to sleep. Maybe you have those issues. There’s good news: many of these horrible stories we can fix simply by turning on the lights: if we know they’re out there, we can avoid them or find ways for them to vanish:

Horrible Story #1) There once was a man who paid an annual fee on his credit card! There’s no reason to pay annual fees for cards unless you’re a high-powered user. Too many cards are available with no fees that still give you a low interest rate and reward points. Only pay fees if you find a card which you are certain will be justified by the rewards that are unavailable from a non-fee card.

Tip: Use online comparison sites to determine which card best meets your needs without paying a fee. (more…)

Refinancing Your House, Car, or Credit Cards

Interest rates are low. Most of the time it’s wise to ignore anyone who tells you “you really need to….”, but believe me, you should check the interest rates of all your debt before interest rates rise.

…and when are interest rates going to rise? That’s the problem; I don’t know. Therefore, I recommend you do it right now.

Before We Begin

Make sure you read my post from two weeks ago: How to Take Advantage of Low Interest Rates. It lays out the simple steps to check your credit. You don’t want any surprises if you end up filling out applications to lower your interest rate.

Today, we’ll focus on three areas: your home, auto and credit cards.

How to Refinance Your Home

1) Compare rates through several lenders. This is done easily through a mortgage broker or an online comparison site. While many lenders appear to have different rates, you’ll find those with lower rates generally have higher fees. On the inverse, those with higher rates often have lower refinance costs. Generally, I prefer lower cost mortgages (which often means a slightly higher rate).

2) Gather information about each type of mortgage. Home lenders offer two basic types of mortgages: fixed or adjustable. While there are many iterations of each type, here are some you’ll see regularly during your search:

a) A basic fixed rate mortgage comes in a 15-year and 30-year variety. Usually, a 15-year mortgage will have a slightly lower interest rate than a 30-year option.

b) Adjustable rate mortgages often keep the rate stable for 1, 3, 5, or 7 years, before changing. Usually the rate will change annually after the short fixed period.

(more…)

From the Mailbag

I’m thinking of buying my first home! One quick question: how do I decide between a 15 and 30 year loan?

Gary

Congratulations, Gary! That’s a big step, and I’m happy to help you with this huge question. For most people, taking on a mortgage is the largest debt they’ll ever owe. It’s important to do it right.

I’ve noticed some advisors like one type of mortgage better than another. I think each type exists for a specific reason. Unfortunately, this means I won’t be able to answer your question directly, but I can give you some tips to help along the way:

First, you didn’t ask about adjustable rate mortgages–where the initial interest rate is low but can adjust to a higher amount after a specified period of time–but for the vast majority of people, they aren’t a great idea right now. Interest rates are at near all-time lows, so locking into a fixed rate mortgage is best for most home buyers. The exception? If you are absolutely certain you’re going to move again soon, an adjustable rate will save you money.

15 year loans are best for people who want to pay off their mortgage quickly and need the forced discipline of a larger payment. The upside of a 15 year loan is that you’re guaranteed to be mortgage-free in 15 years (assuming you remain in the home). The downside? If you lose your source of income, the monthly payment on a 15 year mortgage will be much harder to meet than a 30 year payment.

30 year loans work best for people who want the flexibility of a lower mandatory house payment. It’s a mistake to think that people with 30 year loans will pay them off over a long period of time. On the contrary, I’ve met quite a few successful savers who chose a 30 year loan and then paid significantly more than the amount due each month. Why? If they ran into financial trouble, their monthly payment was pretty low, and the chances they could meet the payment was better than if they’d bitten off the higher 15 year payment.

Don’t take out the 30 year loan and “hope” to make extra payments. Set up an automatic payment plan for more than the requested amount so that you’re still forced to pay your home off early.

I hope this helps and I wish you happy house hunting! Send us a picture! 🙂

The Great Home Debate

Popular wisdom says that you should purchase a home. Have you ever been to a party of homeowners and told someone you rent? It’s not uncommon to hear people mumble that you’re “throwing money away” and not “building equity” through mortgage payments. Because you don’t own a home you’re cast aside as some sort of second-class citizen.

Here’s the million-dollar question: should a creative individual buy or rent a home?

I think you’ll be surprised by my answer.

The issue of buy vs. rent is especially difficult because the creative community is a varied bunch. Although it’s unfair to stereotype a group of people as large as ours, I think we can agree that many of us are wandering hearts. We create for many reasons, but it takes a person comfortable with exploring unfamiliar territory to do what many of us do. A home ties us down, and that may work against our goal as artists.

(more…)