Cove Real Estate



Posted by Cove Real Estate on 4/14/2017

 

Two thirds of American homeowners are somewhere in the process of paying off a mortgage. It may seem like common sense that everyone should try to pay off their mortgage sooner rather than later. However, there are circumstances when it benefits a homeowner more to hold onto their mortgage longer.


In this article, we’ll offer some tips on paying off your mortgage, when you should refinance, and offer some tools that will help you along the long road to debt-free homeownership. If you’re a homeowner and find yourself asking these questions, read on.

I can afford to pay more each month on my mortgage, but should I?

In many cases, paying off your home as quickly as possible saves you money in the long run. A shorter loan term means less interest applied to your loan which could save you thousands of dollars in accrued interest.


What many people don’t think about is whether that money could be better spent elsewhere. If your mortgage interest rate isn’t too high, you might be better off allocating that extra income toward investments or retirement funds where they could earn you more in the long run.


This technique is typically most beneficial for younger homeowners. In your 20s and 30s you stand the most to gain from long-term investments, especially tax-benefitted retirement funds. Ultimately you’ll have to do the math, which is tricky because circumstances change; markets vary, our income goes up and down, etc. However, a good starting place is to determine whether you could earn more in retirement and investments than you could by paying off your mortgage sooner and therefore saving on interest. 

I’ve owned my home for a few years now, should I refinance?

Refinancing is a term that has become ubiquitous for homeowners. There are a few important things to understand about refinancing. First, lowering your monthly payments is not always ideal if it means you’ll end up paying more interest in the long run. Ideally, refinancing your mortgage will help you pay the least amount in total.

One way this can be accomplished is by refinancing to a 15-year fixed-rate mortgage which often darry slightly lower interest rates. This option is designed for people who have improved their credit and increased their income since signing their first mortgage.

Math isn’t my strong suit. How can I figure out my finances?

If all of the numbers and percentages associated with mortgages and refinancing seems overwhelming--you’re not alone. Fortunately, there are mortgage and refinancing calculators that will give you a good idea of where you stand if you decide to increase your payments or to attempt to refinance your loan. Here are some great tools:
  • Use this mortgage calculator for determining how much you would save by making extra payments.

  • This refinance calculator will help you understand the potential benefits of refinancing your mortgage.

  • To determine how much you could earn through investments (rather than paying more toward your mortgage) use this helpful tool.

  • You might be able to increase your savings by creating a better budget for yourself. This website will help you make a detailed budget and hold yourself accountable each month.






Tags: mortgage   home   refinancing   finance  
Categories: Uncategorized  


Posted by Cove Real Estate on 6/24/2016

Buying your first home can be confusing. Securing a mortgage is one of the most important parts of the home buying process. Making sure that you have the right loan and have chosen the right loan officer are among the things a first time buyer has to do to start the process. Here are some more tips on how to ensure a successful purchase: 1. Make sure your deposit is in order. Talk to your loan officer about what amount of a deposit is required for the purchase and type of loan. You will also want to make sure the funds are accounted for and readily available. You can expect deposits to run anywhere between 3 and 20 percent of the purchase price. 2. Plan to have a cash reserve in addition to your deposit. You may want to have a reserve of at least two months mortgage payments. 3. Ask your lender to go over all the fees that apply to the purchase. It is better to be prepared and know how much the actual purchase will cost. These costs are typically added into your loan but there may be some out of pocket expenses too. 4. Consider how much you can comfortably afford not how much you have been approved for. These numbers may vary considerably. Your mortgage costs should not be more than 30% of your household income. 5. The lowest rate is not always the best deal. You will want to look at not only the rate but also the terms and fees associated with the loan.      





Posted by Cove Real Estate on 9/25/2015

Are you looking to buy a bigger home? If you are looking to make the move a jumbo mortgage might be right for you. A jumbo mortgage is a home loan with an amount that exceeds conforming loan limits set by the Office of Federal Housing Enterprise Oversight (OFHEO) or better known as Fannie Mae and Freddie Mac. Currently, the loan limit is $417,000 in most parts of the United States, but can increase to $625,500 in the higher cost areas. OFHEO sets the conforming loan limit size on an annual basis. Jumbo loans have slightly higher interest rates because they carry more credit risk.




Categories: Buying a Home  


Posted by Cove Real Estate on 4/3/2015

Trying to decide what type of mortgage is right for you can be tricky business. So you may be wondering what is an adjustable rate mortgage? An adjustable rate mortgage or ARM, has an interest rate that is linked to an economic index. This means the interest rate, and your payments, adjust up or down as the index changes. There are three things to know about adjustable rate mortgages: index, margin and adjustment period. What is the index? The index is a guide that lenders use to measure interest rate changes. Common indexes used by lenders include the activity of one, three, and five-year Treasury securities. Each adjustable rate mortgage is linked to a specific index. The margin is the lender's cost of doing business plus the profit they will make on the loan. The margin is added to the index rate to determine your total interest rate. The adjustment period is the period between potential interest rate adjustments. For example, you may see a loan described as a 5-1. The first figure (5) refers to the initial period of the loan, or how long the rate will stay the same. The second number (1) is the adjustment period. This is how often adjustments can be made to the rate after the initial period has ended. In this case, one year or annually. An adjustable rate mortgage might be a good choice if you are looking to qualify for a larger loan. The rate of an ARM is typically lower than a fixed rate mortgage. Remember, when the adjustment period is up the rate and payment can increase. Another reason to consider an ARM is if you are planning to sell the home within a few years. If this is the case you may end up selling before the adjustment period is up. Federal law provides that all lenders provide a federal Truth in Lending Disclosure Statement before consummating a consumer credit transaction. This will be given to you in writing. It is designed to help you compare and select a mortgage.





Posted by Cove Real Estate on 10/18/2013

The first step in home buying is getting a mortgage. Many home owners also find themselves in a maze when they start the refinance process. Navigating the mortgage process can be confusing. There is so much to know between rates, types of mortgages and payment schedules. Avoiding making a mistake in the mortgage process can save you a lot of money and headaches. Here is a list of the biggest mortgage mistakes that potential borrowers make. 1. No or Low Down Payment Buying a home with no or a low down payment is not a good idea. A large down payment increases the amount of equity the borrower has in the home. It also reduces the bank’s liability on the home. Research has shown that borrowers that place down a large down payment are much more likely to make their mortgage payments. If they do not they will also lose money. Borrowers who put little to nothing down on their homes find themselves upside down on their mortgage and end up just walking away. They owe more money than the home is worth. The more a borrower owes, the more likely they are to walk away and be subject to credit damaging foreclosure. 2. Adjustable Rate Mortgages or ARMs Adjustable rate mortgages or ARMs sound too good to be true and they can be. The loan starts off with a low interest rate for the first two to five years. This allows the borrower to buy a larger house than they can normally qualify for. After two to five years the low adjustable rate expires and the interest rate resets to a higher market rate. Now the borrowers can no longer make the higher payment not can they refinance to a lower rate because they often do not have the equity in the home to qualify for a refinance. Many borrowers end up with high mortgage payments that are two to three times their original payments. 3. No Documentation Loans No documentation loans or sometimes called “liar loans” were very popular prior to the subprime meltdown. These loans requires little to no documentation. They do not require verification of the borrower's income, assets and/or expenses. Unfortunately borrowers have a tendency to inflate their income so that they can buy a larger house. The problems start once the mortgage payment is due. Because the borrower does not have the income they are unable to make mortgage payments and often end up face bankruptcy and foreclosure. 4. Reverse Mortgages You have seen the commercials and even infomercials devoted to advocating reverse mortgages. A reverse mortgage is a loan available to borrowers age 62 and up. It uses the equity from the borrower’s home. The available equity is paid out in a steady stream of payments or in a lump sum like an annuity. Reverse mortgage have can be dangerous and have many drawbacks. There are many fees associated with reverse mortgages. These includes origination fees, mortgage insurance, title insurance, appraisal fees, attorney fees and many other miscellaneous fees that can quickly eat at the home’s equity. Another drawback; the borrower loses full ownership of their home and the bank now owns the home Avoiding the pitfalls of the mortgage maze will hopefully help you keep in good financial health as a home can be your best investment. .