The Daniels Team's Blog
Once you are ready to buy a house, you need to check your finances to determine how much you can put down, and how much you can afford to pay on a monthly mortgage. Knowing this helps you determine how much house you can afford. However, your interest rate is going to play a huge part in this figure. You can get a mortgage with a fixed rate or an adjustable rate. Typically, adjustable rates start out lower than fixed rates, which could help you if you want to save some money – for a short time.
Fixed Rate Loan
Lenders base a fixed rate on several factors, including the market and your credit score. Once you accept the loan and close on it, that rate will never change. This is a benefit if you don’t like surprises. However, with a fixed rate, if the interest rates go down, you have to refinance to get a lower rate. The good thing is that when rates increase, you don’t have to do anything — your rate stays the same.
Adjustable Rate Loan
With an adjustable rate loan, the interest rate follows the market. Lenders use several indexes to determine what the rate will be. In most cases, the rate is fixed for an introductory period. For example, in a 5/1 ARM, the rate is the same for 5 years, then changes once every year for the balance of the loan. Often the interest rates for an adjustable rate loan are lower than the fixed rate interest rates. However, you could end up paying more interest over the life of the loan if the rates continuously increase each time the rate changes.
Considerations for Adjustable Rate Loans
Before you agree to an adjustable rate loan, be sure to locate key pieces of information:
How high can the rate change each time it changes?
What is the highest rate the rate will ever be, if it gets to the maximum rate?
What is the lowest rate the rate will ever be, as long as rates continue to drop?
Who long is the introductory period where the rate doesn’t change?
What is the date of the first interest rate change?
How often does the rate change?
If your lender’s answers are satisfactory, then you need to figure out what the payment would be at the highest rate. If you believe you can still afford the payment at the highest rate, then you might consider an adjustable rate mortgage.
When an Adjustable Rate is More Beneficial
An ARM is more beneficial in certain situations, including:
If you plan on refinancing before the rate increases;
If interest rates are consistently going down, or staying steady; and
If you are buying an investment property that you do not plan to keep.
Be sure to consider all the different scenarios before you agree to an adjustable rate — if the rate raises significantly and you can’t afford the higher mortgage payments, you could lose your home.
The phrase “the joys of homeownership” is a staple in most households. But sometimes, you think you hear a snicker behind the smile. Now that you’re finally ready to become an owner, you might be wondering if that term is truthful or sarcastic. The answer is “Both.”
How can it be both?
No doubt about it, buying a home and making it yours is a fantastic achievement. Taking on part of the American dream builds your confidence, creates community stability and sets your household’s future on a positive trajectory. However, a home can also become an albatross. That could be what happens when you blindly purchase a home without an upfront and thorough inspection. Even a home that a relative or friend sells to you needs a professional home inspector to give you a baseline of what maintenance and repairs it may need.
How do you stay "joyful?"
- Insist on a home inspection. As mentioned earlier, even if someone you know sells you the home, paying for an inspector to report on what’s up with the home’s major systems means you can plan for your future. If the inspection says the roof needs replacing in five years, you can factor that into your budget and not be surprised or upset when, in five years, you need a new roof.
- Ask for a warranty. As part of the negotiations, have your agent request a home warranty for at least a year. You may even opt for renewal after that year. Get a warranty that covers problems with major systems such as the electrical panel and wiring, plumbing, water heater, HVAC and sprinkler systems. The cost to the seller is typically low, and helps maintain peace of mind when things start to get a little worn.
- Stay on top of maintenance. If you’re handy, this is your moment to shine. Get a list of the most common maintenance issues in a home and schedule it into your free time. These include monitoring for water leaks, changing air conditioning and furnace filters and clearing out the gutters and downspouts before the winter weather wreaks havoc. If you’re not the do-it-yourself type, then ask your agent to recommend someone to keep an eye on things for you so that they don’t turn into major problems.
Is homeownership a reason for joy? Of course. But don’t let unexpected expenses and maintenance issues dim your happiness. Ask your agent about home inspections, warranties and repair contractor referrals.
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If you want to streamline the home selling journey, it usually is a good idea to develop goals. That way, you can identify any potential home selling challenges and address them before you list your residence.
Ultimately, there are many problems that may arise during the home selling journey, and these include:
1. Poor Curb Appeal
How your home looks to buyers is key. If your residence fails to impress buyers when they see it for the first time, these individuals are unlikely to schedule a house showing. As a result, your home may linger on the real estate market for an extended period of time.
Devote time and energy to improve your house's curb appeal – you will be happy you did. By mowing the lawn, removing dirt and debris from exterior walkways and performing other home exterior upgrades, you can make your home an attractive option to buyers. You may even differentiate your residence from the competition – something that may lead to a successful home selling experience.
2. Cluttered Interior
If your home is full of personal belongings, you may want to remove some of these items. By doing so, you can show buyers the full potential of your residence.
For those who want to cut down on clutter, there are many options. Oftentimes, it helps to rent a storage unit that allows you to keep your belongings safe until your residence sells. On the other hand, if you want to get rid of excess items, you can host a yard sale, list your items online or give these items to family members, friends or local charities.
3. Exorbitant Home Price
An exorbitant initial home asking price may be an instant turn-off for buyers. Fortunately, if you analyze the local housing market and your residence, you can establish a competitive initial asking price for your home.
Evaluate the prices of available homes in your area that are similar to your own. Also, you may want to conduct a house appraisal and review an appraisal report. With this information at your disposal, you can price your house competitively.
As you get set to enter the housing market, you may want to employ a real estate agent, too. This housing market professional will help you establish realistic home selling goals, as well as determine the best steps to help you achieve your aspirations.
A real estate agent is committed to a home seller's success, and he or she will do what it takes to help you thrive. If you want to sell your residence as quickly as possible, for instance, a real estate agent can help you do just that. Or, if you want to optimize your house sale earnings, a real estate agent will ensure you can get the best price for your home.
Ready to add your home to the real estate market? Develop home selling goals, and you may be better equipped than ever before to enjoy a fast, profitable house selling experience.