Getting The Best Mortgage Home Loan

by Bill Gassett on May 21, 2010 

Getting the best mortgage home loan for your particular needs is all about doing the proper research so you can hand pick the program that works for your situation in life. There are numerous loan programs available to savvy home buyers.
The most common loan programs are the conventional fixed rate mortgage and the adjustable rate mortgage. The fixed rate mortgage program can be further broken down by the length of time. The most common length of a fixed rate loan is either 30, 20 or 15 years.
The shorter the loan time frame, the lower the rate will be. The best loan program option generally boils down to how long you expect to remain in the home.

The case for a 30 year fixed rate mortgage

A 30 year fixed rate mortgage is the most common loan program and one that gives the borrower the security of paying one set rate for a long period of time. As a borrower you do not have to worry about your rate going up as it is fixed for the life of the loan. You can be confident knowing your payments will be manageable, and you will be knocking down the principal of the loan and building equity slowly but steadily.
The main disadvantage however, to a 30 year fixed rate mortgage is that you will pay a substantial amount of interest during the time you have the loan. There are ways to avoid the large payout in mortgage interest (see below).

The case for a 15 year fixed rate mortgage


The 15 year fixed rate mortgage has become a very popular loan product. It is easy to see why when you see how much extra you pay in interest over the life of a 30 year loan. It can actually be staggering to see just how much money the bank is making in interest! The reason many borrowers opt for the 15 year loan is two fold. When you apply for a 15 year fixed rate loan you will notice that the rate offered is always lower than a 30 year fixed rate loan. Looking at the gap between the two rates can be a serious consideration for a borrower especially as the gap grows larger. With a 15 year loan you will grow your equity in the property far more quickly and save a bundle in interest payments.
What you need to be certain of is that you will have no problem making the payments as they will be much larger given the fact the loan will be amortized over a smaller period of time. For example on a home mortgage loan of $300,000 over 30 years you will pay $1642 per month for principle and interest. The same payment on $300,000 for a 15 year fixed loan is $2301 which amounts to a difference of $659 per month. Not exactly chump change!
If you are uncertain that you can handle the jump in the amount of the payment the best thing to do is go with a 30 year fixed rate loan. You can always add extra principal to your payment each month which will in effect accomplish the same thing as having a shorter mortgage term. By adding the extra principal you will be paying down the note faster which will cause there to be less interest paid over the length of the mortgage.
There is always some discussion amongst financial experts on whether it makes sense to pay down your mortgage. The argument boils down to the fact that mortgage interest is deductible on your taxes. If you are already maxing out your tax-advantaged retirement accounts it may make sense to do so.

The case for a hybrid adjustable rate mortgage (ARM)


If you are going to be buying a home and there is near certainty that you will be moving in a short period of time then one of the hybrid adjustable rate programs may suit your needs perfectly. There are a number of adjustable rate options including a 3, 5, 7 and 10 year loan periods. With the hybrid loan, the rate is fixed for a set amount of time and does not go up until you reach the end of that period.
These hybrid loans generally have lower rates but usually not enough that you would want to use them unless you know you will be moving. The risk to you may be sizable because once the rate term expires there is a good chance that the rate could jump. If your income can not support the jump in the rate that would not be a good thing, especially if your debt load has also increased during the fixed rate period. Having some cash reserves would be an excellent consideration when going with this type of loan program.

The case for an FHA loan ( Federal Housing Association)


The FHA loan has become an exceptionally popular loan program especially amongst 1st time home buyers. The main advantage of an FHA loan is the fact you only have to come up with a down payment of 3.5%. You are also not required to pay private mortgage insurance which is typically required under a conventional loan program when you are putting under 20% down.
The FHA loan is also more flexible when it comes to a borrowers credit. For a full break down of the advantages of an FHA loan see FHA vs conventional rate mortgages. The caveat with an FHA mortgage is that you will pay an up front fee of 2.25% of the loan amount as well as .5% for the 1st five years of the loan or when your home equity hits 22%.

The rest of the mortgage terms to look out for


The other considerations when trying to determine what the best loan program for your needs should be is the amount of points and fees you will be paying. There is a direct correlation between the amount of points and closing costs you will pay for your determined interest rate. The more points you pay the lower the rate will be.
A mortgage point is equal to 1% of the loan amount. So if you are mortgaging $300,000 a point would equal $3000. The fees and closing costs also become important. If one lender is going to charge you more closing costs and fees for the same rate as another lender it might not make fiscal sense to use them. This is where comparing the cost of various loan programs becomes very important.
Mortgage rates and programs are constantly changing today. It is always in your best interests to shop around for the interest rate and program that suits your life situation!


From http://massrealestatenews.com/getting-the-best-mortgage-home-loan/

Weary Sellers Turn To Real Estate Agents

Springfield, MA, April 30, 2010

Today’s market challenges are prompting more sellers to work with a  real estate agent than ever before.  According to the National Association of Realtors® 2009 Profile of Home Buyers and Sellers, “for-sale-by-owner” transactions dropped to a record low 11 percent. And in almost half of those sales, the owners sold their home to someone they already knew. Navigating the increasingly complex real estate transaction is much easier when sellers have professional help. According to the REALTOR® Association of Pioneer Valley (RAPV), the decline in unrepresented sellers indicates a growing awareness of how complicated the current market is.“More than anyone, sellers understand how tough this market has been over the past few years,” Kathleen Witalisz, President of RAPV said. “The drop in for-sale-by-owner transactions illustrates the value consumers place on Realtors® as the first, best source for real estate information and insights – they know that Realtors® can help them reach their real estate goals.” Today’s sellers must compete not only with their fellow homeowners who are selling, but also with the increased inventory of distressed properties offered in short sales or foreclosures. In addition, unrepresented sellers face myriad marketing disadvantages. The Home Buyer and Seller Profile revealed that more than half of sellers without professional assistance didn’t actively promote their homes to potential buyers. Those that did relied primarily on methods with limited exposure, including yard signs, word-of-mouth and newspaper ads.“Most of today’s buyers are online – nearly 9 out of 10 recent buyers used the Internet in their home search – and unrepresented sellers have no access to major online marketing avenues such as REALTOR.com and other Web sites with large pools of listings to which buyers are attracted,” Witalisz said. “Although there are sites that cater to unrepresented sellers, their total listings are in the tens of thousands in contrast with more than 4 million homes showcased on REALTOR.com.” Professional experience and insights also pay off. In 2009, a typical property without professional assistance sold for $172,000 compared with $215,000 for the typical agent-assisted property. Sellers are more likely to generate competitive bids by working with a professional, according to Witalisz.
“Realtors® have specific knowledge of local markets and know what matters to buyers in your area,”
Witalisz said. “Realtors® sell hundreds, if not thousands, of homes over the course of their careers,
compared to the average person who may only move a handful of times during their lifetime. Realtors®
have the experience homeowners need to sell their home.”


http://www.rapv.com/NewsReleases.aspx

Westfield, Ma Statistics

Photo Source

It’s always good to know what’s going on in your specific market. Here are a few statistics I got from MLS specific to Westfield, MA. Curious about your local towns stats? Leave me a comment and I’ll do my best to get them to you right away.

Westfield, Ma Statistics

· Total active residential listings- 156

· Compared to last year at this time- 134

· Average list price- $277, 494

· Compared to last year at this time- $273, 395

· Average market time- 127 days

· Compared to last year at this time- 163 days

· List price to sales price ratio- 93%

· Compared to last year at this time- 91%

· Number of residential sales year to date- 64

· Compared to last year at this time- 76

· Average residential sales price- 225

· Compared to last year at this time- 246

Here is a link to the official website for the city of Westfield.

If your interested in buying a home or selling your existing home or if you just want to get a comparative market analysis to see your homes worth I can be reached at 413-568-9226

All data was gathered on 5/25/10 from MLS. Have any questions about the statistics? Looking for something not listed? Just leave me a comment.

10 Ways to Prepare for Homeownership

I know there are a lot of first time buyers or buyers who haven't bought a home in a while and could use a refresher.

1. Decide what you can afford. Generally, you can afford a home equal in value to between two and three times your gross income.

2. Develop your home wish list. Then, prioritize the features on your list.

3. Select where you want to live. Compile a list of three or four neighborhoods you’d like to live in, taking into account items such as schools, recreational facilities, area expansion plans, and safety.

4. Start saving.Do you have enough money saved to qualify for a mortgage and cover your down payment? Ideally, you should have 20 percent of the purchase price saved as a down payment. Also, don’t forget to factor in closing costs. Closing costs — including taxes, attorney’s fee, and transfer fees — average between 2 and 7 percent of the home price.

5. Get your credit in order.Obtain a copy of your credit report to make sure it is accurate and to correct any errors immediately. A credit report provides a history of your credit, bad debts, and any late payments.

6. Determine your mortgage qualifications.How large of mortgage do you qualify for? Also, explore different loan options — such as 30-year or 15-year fixed mortgages or ARMs — and decide what’s best for you.

7. Get preapproved. Organize all the documentation a lender will need to preapprove you for a loan. You might need W-2 forms, copies of at least one pay stub, account numbers, and copies of two to four months of bank or credit union statements.

8. Weigh other sources of help with a down payment. Do you qualify for any special mortgage or down payment assistance programs? Check with your state and local government on down payment assistance programs for first-time buyers. Or, if you have an IRA account, you can use the money you’ve saved to buy your fist home without paying a penalty for early withdrawal.

9. Calculate the costs of homeownership. This should include property taxes, insurance, maintenance and utilities, and association fees, if applicable.

10. Contact a REALTOR®. Find an experienced REALTOR® who can help guide you through the process.

Found on the Realtor Magazine website http://www.realtor.org/rmosales_and_marketing/handoutsforcustomers/handouts/10waystoprepareforhomeownership