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Beatrice Bloom, Princeton Real Estate Agent

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Financing

INTEREST RATE CHANGES

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Princeton Town Topics – Let’s Talk Real Estate – January 16, 2019

INTEREST RATE CHANGES

Both Sellers and Buyers are benefiting from the continued low interest rates.  Low interest rates make home buying more affordable and keeps mortgage payments down.  That is good motivation for buyers to put an offer in on that special property before rates go back up.  This is a win/win scenario for both the buyer and seller.

The current federal funds rate rose to 2.5 percent when the Federal Open Market Committee met on December 19, 2018. Despite this, mortgage rates slid down to 4.625% (4.797% APR) for a 30 year fixed loan. That’s down from a nearly nine-year high of 4.94% in November.

Even a single percentage point rise in mortgage rates can add more than $100 a month to a home. And unfortunately for buyers, that little rise can turn into extra tens of thousands of dollars over the life of a 30-year, fixed-rate loan.

 

WHAT IS TITLE INSURANCE AND HOW DOES IT PROTECT ME?

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Title insurance protects you and the lender from any liens or claims that may be outstanding on the property.  Unlike other insurance, this protects you from things that happened in the past.

First step in getting the insurance is a title search.  Essentially this is an investigation of the chain of title on the home.  It confirms that there are no unpaid debts, including, unpaid mortgages, unpaid taxes, forged deeds, and contractor claims to name a few. It is estimated that one third of all title searches come up with some sort of issue.  The title company works to resolve these issues prior to closing.

There are two types of policies; lender’s policy and owner’s policy.  The lender’s policy covers the lender for the amount of the loan on the home.  It decreases as the mortgage is paid down. The owner’s policy protects you by against future issues that may arise and for the full length of ownership.

 

WHAT’S THE POINT OF ESCROW?

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Princeton Town Topics – Let’s Talk Real Estate – March 7, 2018

WHAT’S THE POINT OF ESCROW?

Paying a monthly mortgage payment is a reality for most homeowners. But what does that payment include? Principal and interest, yes – but it may also include escrow. Escrow is a kind of holding fund required by your lender, with funds used to pay your taxes and homeowner’s insurance. Some types of mortgages, like FHA loans, require escrow accounts. Other lenders require escrow when your down payment is below 20 percent of the home’s value (in addition to requiring private mortgage insurance or PMI).

What’s the point of escrow? Like PMI, escrow provides the lender with some assurance that required fees – taxes and insurance – are being paid, which in turn assures the home won’t go up for tax sale or be left unprotected in the event of an insurance-covered event. To some degree, having an escrow account can provide the homeowner with the peace of mind of knowing these costs will be paid from their escrow account. The trade-off: The funds in your escrow account aren’t available for investing. Like PMI, you’ll probably be able to stop escrow payments once you reach that magical 80 percent LTV figure (FHA loans are an exception). Keep an eye on your balance so you know when you can cancel and begin paying those costs directly.

WHAT IS PMI?

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Princeton Town Topics – Let’s Talk Real Estate – February 14, 2108

WHAT IS PMI?

The spring buying season is around the corner, and if you’re shopping around, you’ve probably heard a lot about private mortgage insurance (or PMI) – and you may be   wondering what it is. The answer, fortunately, is simple: PMI is a type of insurance that’s required if your down payment is less than 20 percent of the home’s price. It’s intended to provide some protection to the mortgage company in case you wind up  defaulting on your mortgage and your home goes into foreclosure.

How much will your insurance cost? It varies based on the amount of your down payment and your credit score. Most insurance ranges from about 0.3 percent to 1.5 percent of your original mortgage, payable each year.

The good news is, you can drop PMI once your remaining mortgage balance equals 80 percent. In fact, your lender is required to automatically drop PMI once the balance reaches 78 percent of your original mortgage amount. The exception: FHA loans where insurance is required; for these loans, you’ll pay the insurance for the life of the mortgage – it cannot be canceled once your balance drops below 80 percent of your home’s value. Something to remember when shopping for your next home loan.

 

SMART FINANCIAL MOVES FOR 2018 BUYERS

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Princeton Town Topics – Let’s Talk Real Estate – January 31, 2018

SMART FINANCIAL MOVES FOR 2018 BUYERS

In the market for a new home this year? Here are six steps to take now to make sure your finances are in good order:

Order copies of your credit report. Look them over carefully and report any errors immediately so they can be corrected.
Don’t apply for new credit or loans. Doing so could cause your credit score to drop or have a negative bearing on how a mortgage lender views you as a prospective borrower.
Check your debt-to-income ratio. Pay down credit cards as much as you can, but don’t empty your savings entirely.
Arrange for your down payment. Having an adequate down payment means you can avoid PMI, and it can also help in the mortgage approval process.
Be realistic about how much home you can afford. Selling price is just one factor; don’t forget recurring costs like insurance and property taxes.
Have an idea of what your closing costs might be. When you sign the contract for your new home, you can expect to pay somewhere between 2 percent and 5 percent of the home’s cost in fees.

Doing your financial homework means you’ll be in a better position to make an offer – and it also helps avoid unpleasant surprises down the road.

WHAT ARE SELLER CONCESSIONS?

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Princeton Town Topics – Let’s Talk Real Estate – November 29, 2017

WHAT ARE SELLER CONCESSIONS?

For a buyer, closing costs can be hefty, and you might be tempted to take out some of the “sting” by offering a lower price on the home of your dreams. But offering a lower price is just one way to give yourself some financial breathing room at the closing table. Asking for seller concessions is another.

Seller concessions can include just about any costs a seller is willing to give back to you. It can include repair costs for issues uncovered during the home inspection, and it can also include closing costs that are normally covered by the buyer. In fact, while a seller can’t contribute to the buyer’s down payment, it’s perfectly OK – and increasingly more common – to ask for concessions to cover closing fees.

For the seller, offering a concession means the buyer will effectively be able to roll their closing costs into their mortgage, and that can make your home much more attractive than a similar home that offers no concessions. In fact, if you want a fast sale or the market is slow, offering a buyer’s concession can be a smart way to attract more buyers, receive a better price and get to the closing table faster.

 

Beatrice Bloom