Is No-Cost Refinancing Really No Cost?

November 29th, 2011

Dollar House Comparison Perhaps you’re one of the over 1 million homeowners who might benefit by refinancing at today’s lower mortgage rates. But like many Americans, you may not have the available cash to pay for upfront fees. Maybe you’ve heard about “no-cost” refinancing, but you’re not really sure what it’s all about.

A no-cost home loan refinance (also called a no-fee refinance or no-cost mortgage refinance) is a loan transaction in which all your settlement or upfront costs are paid for by the lender or broker. These costs include application, title/escrow, credit check, appraisal, loan origination points, and other processing and underwriting fees. Normally, these out-of-pocket expenses amount to more than $1000. So potentially, you can “save” this money.

However, a no-cost refinance is not a true no-cost loan. The bank or lender may take these fees, bundle them together and add them to your total loan amount – increasing how much you have to pay back. Or, the bank or lender will increase your interest rate on a no-cost refinance. Usually, this rate increase is between a quarter and a half of a percentage point higher than if you had paid the fees upfront. Therefore, regardless of whether the lender increases your total loan amount or increases your interest rate, you’ll be paying for these closing costs over the life of the loan.

So, is a no-cost home loan refinance the right choice for you? It may be if:

1. You don’t have the money readily available to pay all the fees upfront.

2. You don’t want to spend your available cash right now due to other factors.

3. You plan to move within a few years.

4. You refinance often to take advantage of lower interest rates.

However, if you plan to stay in your home and not refinance again for five or more years, a no-cost refinance is probably not for you since you’ll likely pay more over time than what the original upfront costs were in the first place.

You should also note that no-cost refinances will vary by lender. Some lenders may pay for all costs, while others may still charge you for certain fees, such as title, escrow, and appraisal fees.

No-cost refinances are neither good nor bad. You just need to determine what your unique financial situation is, what the upfront fees are, and how the increased loan amount and/or interest rate will impact you. Do your research, crunch the numbers and talk to an experienced mortgage professional to determine if a no-cost home loan refinance is the right decision for you.

Full Disclosure Is the Way to Go

November 23rd, 2011

Disclosure So, you’re selling your house, do you have to disclose to buyers that you’ve had problems with the windows leaking? Or, that you live within a mile of railroad tracks? Or, that the sunroom added to the house by the previous homeowner was built without permits? Yes! And here’s why.

Granted, you want to show your home at its best, but you’re obligated to disclose these issues to potential buyers. However, if you’re the buyer, it’s your responsibility to read the disclosure statements and be aware of past problems before you sign any contracts.

So, what is a disclosure? A disclosure statement informs the buyer about the home and the seller’s experiences with it that may negatively impact the home’s value or enjoyment. Disclosure statements also protect the seller from a future lawsuit.

The types of issues you have to disclose can be dependent upon the laws in your state, city, or even county. And, you may be liable for what you disclose, and don’t disclose, for up to ten years after the home’s sale. Therefore, if you know that your windows leak, or your neighbors’ son has a rock band that practices in garage, or you live near a highway or airport, it’s best to disclose it. Otherwise, if you don’t, you may regret it later. Disclosure statements are valid, legal documents that can be used in court.

Most disclosure statements are a series of questions that the seller must complete about their home and experiences with it. Additionally, if a potential buyer asks questions about the property, the seller is required to answer them, usually in written form.

Some common disclosures include:

Work done to the property – with or without permits
Pets
Termite problems
Property line disputes
Neighborhood issues, such as nearby construction and frequent traffic on nearby roads
Problems with electrical, plumbing, and HVAC systems or appliances
Liens on the property

Disclosure statements are usually provided to the buyer once you’ve accepted their offer on the home. However, in some markets, you may need to provide disclosure statements to any prospective buyer. Be advised, the buyer has the right to back out of an offer based upon what they discover in the disclosure statements.

Either way, it’s best to fully disclose any issues up front to avoid possible litigation later.

If you’re the home buyer, Grandview Lending is here to help you with your mortgage needs. Contact us today to discuss your particular situation.

Fixing the Housing Crisis Utmost in 2012 Voters’ Minds

November 15th, 2011

A recent survey by Move Inc. found that nearly 70% of Americans will base their voting decisions in the next presidential election on how the candidate plans to address the current housing crisis.

According to Move Inc. chief revenue officer Errol Samuelson, “After four years of living in a housing downturn, American voters clearly want answers and are looking to our elected leaders for solutions.”

Of the 1,000 people polled in the online real estate provider’s survey:

82% of Americans think housing is a critical component to the U.S. economic recovery.
Nearly 70% of millennials, the next generation of homebuyers, say their vote in 2012 will be influenced by the candidate’s ideas on fixing the housing industry.
About 75% of people think home-buying conditions will be the same or worse a year from now.

Key areas that survey participants think the next president should focus on include:

Helping distressed homeowners avoid foreclosure.
Keeping interest rates low.
Making more affordable mortgage credit available.

However, among survey participants, there was no clear indication that they want the government to get involved in trying to fix the housing crisis.

31% want the government’s role to stay the same.
Over 21% want the government to increase their involvement.
42% want less government involvement.

Of these respondents, 67% of millennials believe the government’s involvement in the housing crisis should be reduced or remain the same. While over 56% of people between the ages of 35 and 64 think the government should have less involvement.

Samuelson believes the survey shows that candidates who share the same concerns as Americans and make housing a top priority will win the voters’ confidence in 2012.

Whatever your thoughts are on the government’s role in the housing industry, Grandview Lending is here to take care of your mortgage needs!

Even New Homes Are Not Perfect

November 8th, 2011

When you buy a newly build home, you expect it to be perfect. But according to a recent article in the Los Angeles Times, this is not always the case. So as a new home buyer, it’s best to realize that “there is no such thing as a perfect home.”

Unfortunately, some home builders, these days, are cutting costs during the construction process in order to keep their homes affordable and profitable. One practice is to hire day laborers from the groups of unemployed workers that gather around local convenience stores. More often than not, these workers are not skilled plumbers, electricians, or carpenters.

As a result, these individuals’ workmanship can be very shoddy. For example, exhaust fans may vent to nowhere; doors or windows don’t close properly; the hot and cold water spigots are switched; electrical outlets don’t work; insulation hasn’t been stapled to the studs within wall cavities; and sewer lines aren’t connected properly.

Other factors contributing to poor workmanship include:

Language barriers between day laborers and construction supervisors.
Shorter construction schedules, such as homes built in 60 days compared to 120–200 days a little over a decade ago.
Production supervisors overseeing multiple homes at one time.
The substitution of less-expensive materials compared to those in the past.

Therefore, if you’re looking to build and/or buy a newly built home, here are some steps you can take to help make sure your dream home has as few flaws as possible:

Look for a reputable builder by asking family, friends and co-workers for recommendations.
Have your new home inspected twice – once before the drywall is installed and again before the final walkthrough. If your builder says they don’t do walkthroughs, you or your home inspection engineer should tour the home, making a list of any issues to give to the builder. Or, better yet, take photographs of issues to show the builder what needs to be fixed. These repairs should be made before you go to closing and move in. Once you move in, any defects you may find may be your responsibility to fix.
Don’t let a builder tell you he won’t fix something if it’s not a code violation. The code is just the minimum requirements needed.
Don’t take the builder’s word that repairs have been made. Re-inspect the home yourself or have it inspected by a home inspection engineer.
Hire a real estate attorney if any serious issues, such as structural problems or mold, are not corrected.

If you're considering buying a newly built home, check with a professional mortgage broker to discuss what the best mortgage option is for your particular financial situation. Grandview Lending is here to help you.

Residential Water Damage: Stay Out of Hot Water

November 1st, 2011

Washing Machine Seeing a little water on the floor may be nothing. It’s when you have a lot of water on the floor or water stains on the ceiling that you know you have a real problem. Water damage can lead to rotten floorboards; damaged carpeting, rugs, furniture and possessions; and problems with mold.

But did you know that your water heater and washing machine are the most likely culprits of serious damage – even more than Mother Nature? Water heater and washing machine failures lead to one out of every 10 water-damage-related insurance claims.

Almost two thirds of all washing machine malfunctions occur due to internal component failure, machine leaks, and leaking or bursting supply hoses. Malfunctioning supply hoses actually account for over half of all failures. The average age for hose failure is 8.7 years since hoses are rarely replaced until they fail.

Most water heaters last 8 to 15 years. Water heater failures are due to:

Sediment deposits corroding the tank and heater elements;
Wear and tear on the tank and pipes from moving water;
The extreme temperature swings from constantly heating cold water.

Generally, water heaters fail gradually, but not always. Signs of impeding failure include water under the heater, hissing or whistling valves, and/or chronic hot water shortages. Once these signs occur, prompt repair action is required.

Water leaks are the most common cause of residential property damage, even more so than fire. Therefore to minimize any potential water damage in your home, you should take the following steps:

Regularly check washing machine hoses for bulges, cracks, fraying and leaks around the hose ends. If a problem is found, replace the hose. For proactive maintenance, replace hoses every 3 to 5 years. Consider replacing hoses with stainless steel-braided or mesh hoses. Leave at least 4 inches of hose between the water connection and the back of the washing machine to ensure the hose doesn’t kink. Follow the manufacturer’s installation instructions carefully.
Don’t leave the washing machine running when you leave home.
Replace your water heater once every 10 years. Install a catch pan and drain. Regularly inspect your water heater for leaks and signs of rust.
Shut off the water to your home if you’re going to be away for several days. Make sure everyone in your family knows where your home’s water shutoff valve is and how to operate it.
Consider installing a water leak detection system to alert you of any leaks or failures. Or install individual appliance systems to automatically shut off the water supply in case of a leak.

If you do detect a leak or have water damage, immediately turn off the water supply. Remove any standing water and begin drying the area right away to prevent further damage from mold. Contact a plumber and a water extraction company if needed. Take photos or video of the damage before repairs are done for insurance purposes. Keep any receipts from the clean up. And, contact your insurance company as soon as possible to see if your losses are covered. Most standard homeowners’ insurance policies usually cover water damage repairs caused by water heater and washing machine failure due to normal wear and tear.

Grandview Lending has your best interest in mind when it comes to your home. If you’re thinking of moving in the future, we’re here to help answer your questions.

HARP Program Changes Designed to Help More Homeowners

October 25th, 2011

HARP In an attempt to help “underwater” homeowners (those borrowers whose homes are worth less than the amount mortgaged) refinance, the Federal Housing Finance Agency (FHFA) announced plans on Oct. 24 to overhaul the Home Affordable Refinance Program (HARP). Ideally, these changes will enable qualified homeowners, who are up-to-date on their mortgage payments, to refinance their loans into a lower interest rate and/or more stable mortgage product.

If these program changes work as planned, it is believed that the number of possible foreclosures will be reduced, and homeowners will have extra money to spend on other items, thereby, boosting the economy. Additionally, homeowners will be able to refinance into shorter-term mortgages, which means they’ll be able to pay off the balance owed quicker by reducing the term of their loan.

Changes to the program include:

Removing the previous loan-to-value limits, which were set at 125%.
Eliminating the need for a new property appraisal and loan underwriting.
Eliminating certain risk-based fees for borrowers who refinance into shorter-term loans and reducing fees for other borrowers.
Extending the HARP refinance deadline date to Dec. 31, 2013.

The eligibility criteria include:

The existing mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
This program is available for loans with current loan-to-value ratios above 80%.
Borrowers must be current on their mortgage payments. You can have no late payments in the past six months and no more than one late payment in the past 12 months.
If your mortgage was previously refinanced under HARP, you are not qualified to refinance under these program changes.

The original HARP program was supposed to have helped 4-5 million homeowners; however, it has only helped about 894,000 borrowers. The FHFA estimates that by the end of 2013 HARP refinances could help as many as one million underwater homeowners.

But critics say this will barely make a dent when 11 million mortgages, or 23% of all home loans, are underwater, according to CoreLogic, a housing research firm.

Also, due to HARP’s flat results during its first three years, many people are skeptical about this new initiative.

“With negative equity at 26.8% and un- and under-employment at 16.5% in September, most foreclosures are occurring because of a household’s inability to pay the mortgage or sell the house. So, modest decreases in a monthly mortgage payment won’t do much to solve this fundamental underlying issue,” said Zillow Chief Economist Stan Humphries.

“But, for households that can pay their mortgages this will reduce their mortgage payments, therefore helping them to repair their balance sheets by putting more money in their pocket. In short, I don’t think this will materially reduce the expected number of defaults, but it will be a strong economic stimulus that is relatively revenue neutral.”

The FHFA is expected to publish the final changes to HARP in November. To take advantage of this program, you need to determine if your mortgage is owned by Fannie Mae or Freddie Mac, and you meet the eligibility requirements. If so, you should contact your existing lender or any other mortgage lender offering HARP refinances.

What to Do if Your Home Isn’t Selling

October 18th, 2011

Home Sale If your home has been on the real estate market for several months, and you haven’t gotten any offers, you may be wondering what to do next.

Unfortunately, the market is loaded with lots of homes currently, and the economy is not helping either. Therefore, it’s important to step back, reassess, and perhaps put in a little extra effort to increase your odds of getting your home sold.

Here are five tips you can try to position your home to get it sold:

1. Consider taking your home off the market temporarily

If your home has been on the market for 90 days or more, buyers may wonder why and assume that there’s something wrong with it. By taking your home off of the market for a few months, when you do put it back on the market, your home will appear to be a new listing. Plus, by that time, there will be a new set of buyers looking for homes.

2. Reconsider your listing price

If you’ve received lower offers on your home that you previously didn’t consider, now may be the time to determine what the lowest price is that you’ll accept. Or, review the prices of similar homes in your area and consider reducing your price to an amount slightly lower than the homes comparable to yours. It’s also important to be realistic when an offer does come in. In today’s market, it’s not wise to turn down a potential buyer with solid financing just because you’re expecting to get unrealistic offer.

3. Update your home’s appearance

Ask your real estate agent to get feedback from other agents on your home and what improvements you can make to get your home sold. Quick and not-too-expensive cosmetic improvements, like a fresh coat of paint in a neutral color, cleaning the carpets, removing clutter to make the rooms seem bigger, or adding landscaping, can make a big difference in the eyes of a potential buyer.

4. Ensure your home has a good online presence

According to surveys by the National Association of REALTORS®, 91% of homebuyers start their home search online. Make sure your agent has several photos of your home’s interior on their website that give potential buyers a good impression. You may also want to take out some extra online or print ads to sell your home.

5. Consider getting a new listing agent

All agents are not the same; therefore, you need an agent that’s knowledgeable about the marketplace, has a proven track record in your area, and is willing to give your home extra attention to get it sold.

These are just a few tips to selling your home in this tough economy. Above all, remember you need to give potential buyers a good reason for buying your home with the best deal you can provide.

And when you’re ready to start looking for a new home yourself, contact Grandview Lending for information on financing options.

4 Factors to Consider When Buying Foreclosed Properties

October 11th, 2011

Foreclosure For Sale Are you thinking about buying a foreclosed home (also called a Real Estate Owned – REO)? While there is some potential for great deals, you need to educate yourself on the complexities of buying foreclosed properties. Some factors you should consider:

Will This Be Your Primary Home or an Investment Property?

A foreclosed home may require some fixing up, so you shouldn’t count on flipping the house for a profit. Also since home prices in some areas may not bounce back for awhile, you need to make sure you can profitably rent the property.

How Solid Are Your Finances?

Foreclosed homes can come with surprise expenses. Therefore, you need to do your homework about the market and the property. Areas with a surplus of foreclosures signal a declining market with the risk of further property value declines. Also some properties can have titles that are burdened with judgments, liens, late fees and other fines and attachments that you may have to pay off. So make sure you’re getting a clear title that has no issues and all liens have been released.

If you’re considering purchasing a property that is in less-than-mint condition, you need to realize that most banks sell REOs as is. Only in about 25% of cases will lenders fix some of the home’s issues before the sale closes. Therefore, you need to budget accordingly if the home requires some work.

Get Pre-qualified for a Mortgage

You should talk with an experienced lender to help you determine a good estimate of the actual home price. Also, your lender will help you figure out what you can afford for a monthly payment.

Hire Experts Experienced with Foreclosed Homes

It’s a good idea to make sure that you hire experts who are experienced with foreclosed homes to guide you through the process and any paperwork. This includes a reliable real estate agent and a trusted attorney. Never buy a foreclosed home by yourself.

Additionally, since many REOs may have been vacant for several months and can be in bad shape, you need to tour the property with a contractor to help you spot problems and determine how much it’s going to cost to fix them. Since the bank will likely sell the home as-is, you need to be well-informed about any major repairs.

Is Now a Good Time to Buy a New Home?

October 4th, 2011

Last week Zillow Mortgage Marketplace reported that the quoted mortgage rate on a 30-year fixed-rate loan fell to 3.76%, another all-time low. Also, according to the National Mortgage News, the recent low rates appear to finally be stimulating new mortgage applications, which went up to 9.3% during the week of Sept. 19-23. So, you may be thinking, “Is now a good time to buy a new home?” To help you answer this question, you need to consider a few factors.

First, do you plan to own the property for a long time? When you buy a home, you expect to be financially better off in the future than you are today. However, you need to own the property for at least 5 years or more in order to offset the mortgage transaction costs, any repairs, and the monthly costs of ownership. Therefore, you need to find a home that you love – one that fits most, if not all, of your current and future needs, if you’re planning to be long-term homeowner.

Other issues you should consider include:

Do you have a steady job?
If you’re currently a renter, the property you’re looking at shouldn’t be considerably more expensive to own compared to what you’re renting.
Is the home fairly priced compared to similar home sales in the area?
Is the home in a stable area?
Is the home in good shape without needing a lot of fix-up?
Will the payments be affordable?
Have you done all your homework to reduce your risk as much as possible?

If you’ve determined there’s a home that is the RIGHT property for you and that you’re going to own it for a long time, you need to work with a reputable mortgage broker to lock in your loan. Grandview Lending can work with you to see if you qualify for a mortgage loan and answer any questions you may have. So, is it a good time to buy for you?

Lower Your Heating Bills: 7 Home Energy Efficiency Tips

September 27th, 2011

Energy Savers As the weather starts to get cooler, you’ll soon be turning on the heat in your home. By making sure your home is energy efficient now, you’ll save money before winter heating bills start to arrive in your mailbox. Here are seven suggestions to make your home more efficient before temperatures start to drop:

1. Schedule a home-energy audit

If you’re not sure where your home’s biggest energy problems are located, a professional energy audit can help you figure out the most cost-effective measures to improve your home’s comfort and efficiency. Check with your utility company or the state’s energy department to determine if they offer home energy reviews. Sometimes you can get an energy audit for free or with a rebate. Or, they can provide you with the names of reputable energy-audit firms. A good inspector will perform a thermal-imaging scan to determine where heat is escaping and a blower-door test to see where air is coming in through cracks.

2. Install a programmable thermostat

While you could just lower your thermostat whenever you’re gone or of a night while you’re asleep, it’s easy to forget to do this. Therefore, by installing a programmable thermostat, your heat will be adjusted automatically. A programmable thermostat can save the average family about $180 a year.

3. Clean or replace furnace filters

Your furnace will run more efficiently if you clean or change the air filter each month during the heating season. Plus, you’ll save money. Mark your calendar so you don’t forget, or switch to a permanent electrostatic filter which can trap about 88% of dust and debris in your home. If members of you family suffer from allergies, a HEPA filter can remove 99.97% of airborne particles.

4. Have your heating system tuned up

Like a car, your heating equipment runs better with periodic tune-ups. Check with your utility company to see if they offer free annual inspections by qualified technicians. Also some furnace manufacturers and dealers may offer free or discounted tune-ups. By having your furnace cleaned, lubricated and properly adjusted, you can save up to 5% on heating bills. If you need to have your furnace replaced, make sure you take advantage of federal tax credits.

5. Turn down your water heater

By lowering the temperature on your water heater to 120 degrees F (or lower), you can reduce your water heating costs by up to 10%. Plus, you reduce the risk of scalding accidents, especially in homes with children. If your water heater dial says “low,” “medium,” and “high,” instead of specific temperatures, you should set it somewhere between low and medium.

6. Use caulking and weatherstripping

Leaks in your home can lower energy efficiency by 5% to 30% a year, according to the U.S. Department of Energy. Therefore, caulking and weatherstripping can save you money on your heating bills. Places to look for leaks include: under doors, around windows, around chimneys, around can lighting fixtures, where pipes or wires exit your home, and along the foundation.

7. Install energy-efficient storm doors and windows

By installing a storm door, you can increase your home’s energy efficiency by 45%. Plus, these doors can let in light and ventilate your home in warmer weather. Additionally, you can save energy by installing glass storm windows or do-it-yourself plastic-film storm windows to keep out the cold.

By following these tips, you should save money on your home heating bills. However, if your home energy audit reveals you need major home renovations, like a new furnace, water heater, and/or windows and doors, you may want to consider taking out a remodeling loan to finance these purchases. Grandview Lending can work with you to see if you qualify for a home improvement loan.