I created this list for two reasons. First, I want to give you a good understanding of the home buying process from start to finish. Secondly, I want to help you identify those areas where your knowledge-level is lacking, so you can conduct further research on your own.
Preliminary Considerations
1. Learn the home buying process in advance. You'll make much better decisions with a better understanding of the process.
2. Learn the lingo while you're at it (especially all the mortgage terms). You'll have a smoother home buying experience if you "speak the language."
3. Obtain your credit report. To get copies from all three credit bureaus at once, visit www.AnnualCreditReport.com.
4. Review your credit report. Make sure there are no errors. Check everything from the administrative information to the credit history.
5. Fix errors quickly. If you find an error on your credit report, go to the company's website where the report came from (TransUnion, Equifax or Experian) to contest it. Don't delay.
6. Run the numbers. Use an online mortgage calculator to get an idea how various mortgage amounts translate into monthly payments.
7. Check your debt-to-income ratio. Mortgage lenders prefer your overall debt to be no more than 20% of your net monthly income. If your debt is more, pay it down as quickly as possible.
8. Start saving your cash. Mortgage lenders like to see that you have some cash reserves on hand, and you'll need them for any unexpected fees or costs that might arise.
9. Get pre-qualified. Pre-qualification is an informal review of your finances by a mortgage lender to see what amount you might qualify for.
10. Avoid new lines of credit. Don't sign up for new credit cards or make any large credit purchases while you're "under review" by a mortgage lender.
11. Add HomeBuyingInstitute.com to your Internet favorites or bookmarks. Few websites contain as much helpful home buying information for first-time buyers.
Finding a Real Estate Agent
12. Ask friends or family. People who know you well are in the best position to recommend an agent who is right for you.
13. Talk to multiple agents. Don't think you have to sign on with the first agent you meet.
14. Ask how they search. Make sure your agents is going to use every means possible to find the right home for you. That means using the MLS in addition to their preferred listings.
15. Ask how they network. An experienced agent will often be part of a vast network of real estate professionals. This can sometimes help you find a home before it's even listed.
16. Ask about mortgage connections. It will save you time and headache if your agent can point you toward a good mortgage company.
17. Read paperwork carefully. At some point, your chosen agent will ask you to sign an agency agreement. It's usually a boilerplate document, but be sure to read it carefully all the same.
18. Consider the "vibe" factor. You might be working with this person anywhere from 2 to 12 months, so it certainly helps if you like them on a personal level.
19. Exchange cell phone numbers. You should have your agents cell number in your wallet, and vice versa. You don't want to miss an opportunity simply because you couldn't be reached.
House Hunting
20. Create a "need vs. want" list. Make a spreadsheet or checklist of the things you need in a home, versus the things you want. Print a copy for each house you visit and check items off.
21. Practice self-reliance. Don't over-rely on your agent when it comes to finding a home. Get out there and do some hunting yourself. It's a necessity, but it's also exciting!
22. Use multiple channels. The more channels you use to search for a home, the better. Read the newspaper, cruise the neighborhoods, and surf the web.
23. Use the Internet to your full advantage. Bookmark the real estate listing sites you find most helpful. Visit them once a day and write down new homes that meet your criteria.
24. Create a Google Alert. Visit Google's home page, click on "More" and find the Google Alerts. Enter real estate phrases for your area, and you'll get daily updates with news and info.
25. Feel free to snoop (sort of). When house hunting, it's okay to peek into dark corners, basements, storage sheds and the like. Respect the owner's privacy, but see the whole house.
26. Ask plenty of questions. Don't be shy about asking the sellers questions, if they're home.
27. Validate the asking price. It's called an "asking price" for a reason. Compare it to recent sales in the area. Your agent should be expert at this.
28. Consider shopping, dining and the like. Is the home near the places you frequent, or will it be a long drive?
29. Consider the commute. If you're a daily commuter, distance is a big consideration.
30. Visit during rush hour. Is the home hard to access or exit during rush hour? Is there a lot of traffic noise?
31. Check out the zoning. Are you surrounded by residential areas, or is there a soon-to-be-used commercial zone right across the street?
32. Research the neighborhood, not just the house. Neighborhoods impact property value as well as your own happiness.
33. Research taxes. Sometimes, two neighborhoods right across the street from one another will have different tax situations. Don't make assumptions.
34. Research future development. Will that nice meadow down the street be a highway extension or shopping mall in two years?
35. Bring a "disinterested witness." A level-headed friend or family member will help you judge the pros and cons of each home.
36. Avoid "The One" syndrome. Don't pull up to a home and say, "This is the one!" It might be, but you need to be cool-headed and open-minded during your first visit.
37. Bring a digital camera. It's a great way to record the details of each home for later review.
38. Bring a notepad. Jot down some notes about each home, and label each page by address.
39. Ask about ghosts, poltergeists or other forms of haunting. Just kidding.
40. Think five years ahead. Will the home still suit your needs if your family grows?
41. Play home inspector, casually. The full inspection will come later, but you should at least give the "big ticket" items (roof, heating system, etc.) a glance when visiting.
42. Keep an eye out for mold, standing water and other symptoms of disrepair.
43. Research schools. This is important whether or not you have school-aged children. Schools affect property values.
Making an Offer
44. Base your offer on evidence, not emotion. Remember, the lender will appraise the home later on. If it appraises for less than you've agreed to pay, you'll have problems.
45. Use your agent's experience. It might be your first offer, but your agent has probably seen dozens.
46. Discuss contingencies. Will your offer be contingent upon something, like the sale of your current home?
47. Prepare for all possible responses. What will you do if the seller makes a counteroffer or rejects your offer outright? Conduct "rehearsals" for each scenario.
48. Move quickly (but cautiously) in seller's market. Delays can cause a home to slip through your fingers.
49. Plan the closing date. This will normally be agreed upon during the offer process.
Choosing a Mortgage
50. Study the different types of mortgages, especially the pros and cons of each.
51. Consider your staying time. How long you plan to stay in a home will often determine which type of home loan is best for you.
52. Learn about new mortgage packages. A variety of "creative financing" loans have emerged in recent years. Learn about them.
53. Shop for the best interest rate. Mortgage lenders will offer different rates based on how comfortable they are lending to you. So shop around.
54. Read up on RESPA. The Real Estate Settlement Procedures Act protects you from unethical lenders. Familiarize yourself with it.
55. Consider paying points. A point is one percent of the loan amount. Paying points can lower your interest rate. Look into whether or not it's a good idea for your situation.
56. Don't go it alone. Ask your agent for advice. Talk to friends and family who've been through the home buying / mortgage process before.
57. Factor in PMI. If your down payment is less than 20% of the loan amount, you'll probably have to pay private mortgage insurance (PMI).
58. Visit the mortgage section of HomeBuyingInstitute.com. You can learn about everything mentioned above, in much greater detail.
59. Watch out for unethical lenders. Talk to your agent or real estate attorney is something seems strange or too good to be true.
The Mortgage Application
60. Be honest. Don't let anyone talk you into falsifying information on your mortgage application. You'll be the only one held accountable.
61. Ask questions. And ask them again, until you're comfortable that you understand each part of the application.
62. Read the fine print. Often, the most important parts of an application are in the fine print. Don't let these details go unnoticed.
63. Don't sign blank areas. If a section of the mortgage application is blank, either 'X' it out or leave it unsigned.
64. Keep a copy for yourself. This applies to all documents during the home buying process. Start a folder with copies of everything.
65. Get a truth-in-lending statement. After you apply for the loan, the lender is required to give you an estimate of the total costs associated with the loan.
66. Plan for more than truth-in-lending statement. Unfortunately, it's common for the actual costs of a loan to be more than the lender's estimate. So plan for more.
The Home Inspection
67. Get a home inspection! At around $500, it's a small price to pay for peace of mind.
68. Hire a certified inspector. Anyone can claim to be an inspector. So make sure yours is certified by a professional organization.
69. Tag along if possible. You'll learn a lot about the inner workings of the home.
70. Categorize discrepancies, based on whether or not you want the seller to fix them.
71. Be realistic with repair requests. In a seller's market, you may not get all the repairs you want. So be realistic with what you're asking.
72. Get a termite inspection. Make the offer contingent upon a termite-free inspection.
The Home Appraisal
73. Understand the appraisal process. It's for the lender's protection, but it will also tell you if you're overpaying for the home.
74. Have a plan for under-appraisal. You can pay the difference, the seller can lower the price, or you can walk.
Pre-Closing / Pre-Settlement
75. Read up on closing procedures. Start with a refresher on RESPA.
76. Talk to friends and family who've been through a closing process. Learn from them.
77. Stay in touch with your lender, your agent, and the escrow company. Make sure they have all the paperwork they need to avoid delays.
78. Keep saving your money. Real estate closings often come with unexpected costs.
79. Be on the lookout for your HUD-1 statement. You should get one several days before closing. It will list the total amount due at closing.
80. Transfer utilities. Now might be a good time to start putting the utilities into your name.
81. Get hazard insurance. Most lenders require it, but it's mainly for your own protection.
82. Conduct your final walk-through. Make sure all requested repairs have been made.
83. Get a certified check for the amount due on the HUD-1 statement.
84. Confirm the time and location of the closing.
The Closing / Settlement Process
85. Bring your ID. The escrow company will probably want to verify it.
86. Don't forget the check!
87. Bring some blank checks, just in case unexpected costs or fees arise.
88. Don't feel rushed. Escrow companies do it for a living, but it's probably you're first time.
89. Read thoroughly. People make mistakes, so read each document carefully (especially the bottom-line amounts).
90. Ask questions. You're not being a pest for asking a lot of questions. You're simply looking out for your finances.
91. Don't make assumptions. For example, just because you agreed to buy mortgage points for a lower interest rate, don't assume it has been processed that way. Check the paperwork.
After Closing
92. Follow-up on your utility transfer.
93. Complete a change of address form for the postal service.
94. Notify friends and family of your new address. Postcards and emails work well.
95. Get a safe deposit box for your important documents, like your homeowner's insurance policy.
96. Set up auto-pay for your mortgage payments. It will be one less hassle to worry about each month, and it will also help you avoid missing payments.
97. Go meet the neighbors. If your neighbors don't come and introduce themselves, go say hello. Remember, these are the people who will keep an eye on your home when you're away.
98. Ease into your mortgage payment. Before filling the house with new furniture or electronics, give yourself a few months to adjust to the new mortgage payment.
99. Do the happy dance (whatever your version might be). Just remember to stretch first.
100. Break out the champagne, or your preferred non-alcoholic beverage.
101. Exhale.
About the Author: Brandon Cornett is the editor of HomeBuyingInstitute.com. You can learn more about the home buying process by visiting www.HomeBuyingInstitute.com
For more information about Florence Oregon Real Estate give me a call 541-991-7794 or visit my website www.maureensellsflorence.com
Friday, May 30, 2008
Thursday, May 29, 2008
Just a note...
For more information about Florence Oregon Real Estate give me a call 541-991-7794 or visit my website www.maureensellsflorence.com
Moving Tips for Consumers - Don’t Forget to Negotiate Aggressively
RISMEDIA, May 28, 2008-Interstate mover rate deregulation in 2008, combined with fewer consumers “on the move,” has created a buyers market for professional moving services during National Moving Month this May. As a result, Move, Inc., a leader in online real estate and operator of Moving.com, recommends consumers negotiate more aggressively to lower costs and use the free moving tips and tools provided on Moving.com when planning their move this year.
Services and tools provided free of charge to consumers at Moving.com include: Find a Mover; Find Moving Trucks; Find Moving Help; Find Self Storage; Boxes and Supplies; Free Credit Report; Move Planner; Salary Calculator, Local School Reports, City Reports, Compare two Cities, Rental Guides, and more.
“We recommend consumers leverage the convenience of Internet sites like Moving.com to locate professional movers and then shop rates aggressively to find the best pricing,” said Anne Carroll, vice president of strategic partnerships at Move, Inc. “To win business during the high season kicked off every May by National Moving Month, some professional movers may even provide discounts on supplies, such as boxes and other related services.”
Consumers unsure about what type of moving services they need can take an online quiz at Moving.com. After answering a series of short questions, they will receive a report to help decide whether full or self service assistance is necessary and what type of trucks are most appropriate. A handy chart compares the effort and cost involved in different types of moves, factoring in home size and timing.
“To help reduce stress over the cost of a move, consumers need to be sure to figure in every single item, including those in attics, basements, garages, sheds, closets and under beds,” Carroll says. “We recommend consumer reach a complete understanding about costs with a professional mover ahead of time to avoid any surprises with the final bill.”
Carroll recommends that consumers remember that quality is just as important as price in planning a successful move. At Moving.com, the company says that consumers are matched with prescreened, licensed and insured movers. Costs are higher or lower depending on shipment weight and distance since movers base their charges on shipment weight, current fuel costs, and other required services.
Effective January 1, 2008, the US Transportation Board announced the termination of mover rate agreements was necessary to protect the public interest, particularly the public’s interest in reasonable shipper rates. In compliance with the decision, the American Moving and Storage Association (AMSA) ceased all efforts to update, revise, maintain or program Bureau tariffs as of 2008.
Each year, approximately 19 million American households (42 million people) move to a new home, representing an average of 16% of the population or 115,000 people per day. In five years, nearly 80% of the US population will move.
For more information, visit http://www.move.com.
Services and tools provided free of charge to consumers at Moving.com include: Find a Mover; Find Moving Trucks; Find Moving Help; Find Self Storage; Boxes and Supplies; Free Credit Report; Move Planner; Salary Calculator, Local School Reports, City Reports, Compare two Cities, Rental Guides, and more.
“We recommend consumers leverage the convenience of Internet sites like Moving.com to locate professional movers and then shop rates aggressively to find the best pricing,” said Anne Carroll, vice president of strategic partnerships at Move, Inc. “To win business during the high season kicked off every May by National Moving Month, some professional movers may even provide discounts on supplies, such as boxes and other related services.”
Consumers unsure about what type of moving services they need can take an online quiz at Moving.com. After answering a series of short questions, they will receive a report to help decide whether full or self service assistance is necessary and what type of trucks are most appropriate. A handy chart compares the effort and cost involved in different types of moves, factoring in home size and timing.
“To help reduce stress over the cost of a move, consumers need to be sure to figure in every single item, including those in attics, basements, garages, sheds, closets and under beds,” Carroll says. “We recommend consumer reach a complete understanding about costs with a professional mover ahead of time to avoid any surprises with the final bill.”
Carroll recommends that consumers remember that quality is just as important as price in planning a successful move. At Moving.com, the company says that consumers are matched with prescreened, licensed and insured movers. Costs are higher or lower depending on shipment weight and distance since movers base their charges on shipment weight, current fuel costs, and other required services.
Effective January 1, 2008, the US Transportation Board announced the termination of mover rate agreements was necessary to protect the public interest, particularly the public’s interest in reasonable shipper rates. In compliance with the decision, the American Moving and Storage Association (AMSA) ceased all efforts to update, revise, maintain or program Bureau tariffs as of 2008.
Each year, approximately 19 million American households (42 million people) move to a new home, representing an average of 16% of the population or 115,000 people per day. In five years, nearly 80% of the US population will move.
For more information, visit http://www.move.com.
Transform your Life
Your thoughts create your world and your words indicate your thoughts. When you eliminate complaining from your life you will enjoy happier relationships, better health and greater prosperity. The Complaint Free program helps you set a trap for your own negativity and redirect your mind towards a more positive and rewarding life. Take a moment to check out this website
http://www.acomplaintfreeworld.org/
I found this website to be quite inspiring, so I thought I'd pass it along...
Take Care!
Maureen
For information about Florence Oregon Real Estate give me a call 541-991-7794 or visit my website www.maureensellsflorence.com
http://www.acomplaintfreeworld.org/
I found this website to be quite inspiring, so I thought I'd pass it along...
Take Care!
Maureen
For information about Florence Oregon Real Estate give me a call 541-991-7794 or visit my website www.maureensellsflorence.com
Adjustable Rate Mortgages - A Guide to ARM Loans
by Brandon Cornett
Many home buyers choose the adjustable rate mortgage (ARM) in order to save money during the first few years of homeownership. But later, these same homeowners run into trouble when the adjustable rate mortgage adjusts (hence the name) to higher interest rates.
In many cases, such adjustments can greatly increase the size of the overall mortgage payment, which catches a lot of homeowners off guard. In this guide, we will examine the adjustable rate mortgage in more detail. After reading this guide, you will better understand the ARM loan and will be able to make wise decisions about such loans.
What Is an ARM?As the name implies, an adjustable-rate mortgage differs from a fixed rate mortgage in the way it adjusts to a new interest rate at some future point in time. Fixed rate mortgage loans carry the same interest rate through the entire life of the loan. So the interest rate you would pay in Year 1 would be the same rate as years 5, 10, 15 ... all the way through the end of the loan's term. On the other hand, with an adjustable rate mortgage, the interest rate will change periodically. This can cause payments to go up or down, depending on the prevailing rate at the time of adjustment (and other factors).
In other words, an adjustable rate mortgage is a loan with an interest rate that changes at some point in the future. Most of the time, ARM loans start off with a lower monthly payment than a fixed rate mortgage. But keep the following points in mind:
Unlike a fixed rate mortgage, the payments on an adjustable rate mortgage can change. This can increase the size of your mortgage, sometimes significantly.
You cannot predict what the interest rates will do three or five years from now, when your ARM loan adjusts.
It's possible that you could eventually owe more money than you borrowed.
If you want to pay off your ARM early to avoid payment increases, many lenders will charge a penalty fee for it.
Shopping for an Adjustable Rate MortgageWhen shopping for a mortgage, it's important to compare the rates and terms offered by different lenders. It's like anything else in life -- only by shopping around can you find the best deal. These days, comparing one adjustable rate mortgage to another can be confusing. That's because you have to understand the concepts of index, margin, caps, payment options, etc. It is beyond the scope of this article to show comparison examples, data charts, etc. But you can get plenty of those from the Federal Reserve's tutorial on ARM loans, available through the link below:http://www.federalreserve.gov/pubs/arms/arms_english.htm
Primary Advantage of an ARM LoanThe biggest advantage of an adjustable rate mortgage is the lower initial interest rate. Most lenders charge lower initial rates for an ARM loan than they charge for fixed rate mortgages. And since the interest rate is a key ingredient of the mortgage payment, this would in turn lower the mortgage amount you have to pay each month. For many first-time home buyers, this can be a big selling point for the adjustable rate mortgage. But there is also a key disadvantage to these loans.
Primary Disadvantage of an ARM LoanAs we have discussed, the characteristic that makes an adjustable rate mortgage unique is that the interest rate adjusts periodically. When and how often the loan adjusts is something you will know in advance, because the lender is required by law to tell you those things. But the amount it adjusts will remain an unknown variable, because nobody can predict what interest rates will do in the future. This is the primary disadvantage of an adjustable rate mortgage, the uncertainty of interest rate changes / increases.
Key Ingredients of the Adjustable Rate MortgageTo get an even better understanding of how the ARM loan works, you should understand the key ingredients of such a loan.
* Initial Rate - We have already discussed how an adjustable rate mortgage loan starts off with a relatively low interest rate in the beginning. This is known as the initial rate, and it will stay in place for a limited period of time -- usually 1 to 5 years. But here's the thing to remember. On most adjustable rate mortgages, the initial interest rate (and by extension the initial payment amount) can vary greatly from the rates and payments you would face later in the loan's term.
* Adjustment Period - This is just what it sounds like, the period during which your adjustable rate mortgage adjusts to a new interest rate (and payment amount). Usually, the interest rate on an ARM loan will change every month, quarter, year, 3 years, or 5 years, with the latter options being the most common. A loan with an adjustment period of 1 year is called a 1-year ARM, which means the interest rate and payment can change once per year (after the initial period).
* Loan Descriptions - The law requires that mortgage lenders must give you written information on each type of ARM loan you are interested in. The information they provide must explain the term / conditions for each adjustable rate mortgage, as well as details about the index and margin (which determine the interest rate), how your rate will be determined, how often the rate will change, caps (or limits) on rate changes, plus an example of how high your monthly mortgage payment might go based on adjustments.
* Interest Rate Caps - Interest-rate caps are an important concept in the world of adjustable rate mortgage loans. A cap is just what it sounds like ... a limit on the amount your interest rate can increase. Interest rate caps come in two versions: 1. Periodic adjustment caps limit how much the interest rate can go up or down from one adjustment to the next (after the first adjustment). 2. Lifetime caps limit the interest-rate increase over the life of the loan. Lifetime caps are required by law, so you'll find them on nearly all adjustable rate mortgage loans.
* Payment Caps - Many ARM loans also cap (or limit) the amount your monthly payment can increase at the time of each adjustment. So if your adjustable rate mortgage loan had a payment cap of 8%, your monthly payment would not increase more than 8% over your previous payment amount. Be Careful Choosing an ARM Loan
Avoiding Payment ShockIn your financial planning, the biggest thing you want to avoid is payment shock. Payment shock is what happens when your mortgage payment rises steeply during a rate adjustment. For example, let's say you took out an adjustable rate mortgage for a $200,000 loan. During the first year of an ARM, you'll usually enjoy a very low interest rate. That's the primary benefit. So let's say you start out with a 4% interest rate that later goes up to a 7% interest rate (after the second year). During the first two years, the mortgage payments would be somewhere in the neighborhood of $950 per month. But after the adjustment at year two, those payments would go up to more than $1,300. That's a big difference.
Percentage points may not seem like much by themselves. But when you plug them into a mortgage calculator, you can see how significant they really are. So if you are considering an adjustable rate mortgage, just be wise about it and think long-term. If you plan to stay in the home and hold the loan for many years, make sure you have a plan for when the rate adjusts. Or make sure you can handle a significantly larger mortgage payment.
ConclusionHere's what we want you to take away from this lesson. Adjustable rate mortgages offer benefits up front (during the initial period) in the form of lower interest rates. But they are full of uncertainty later on, and this can lead to unpleasant financial surprises. If you understand this concept, and you plan to sell the home a few years down the road, an ARM loan might be a good option for you.
But if you're not comfortable with the uncertainty of rate and payment adjustments, or if you plan to stay in the home (and hold the mortgage) for many years, an ARM loan might be a bad idea.
About the Author: Brandon Cornett publishes a network of websites related to home buying and mortgages. His latest website offers tips on mortgage refinancing and related topics. Learn more at http://www.mortgage-refinance-advice.com
For more information about Florence Oregon Real Estate give me a call 541-991-7794 or visit my website www.maureensellsflorence.com
Many home buyers choose the adjustable rate mortgage (ARM) in order to save money during the first few years of homeownership. But later, these same homeowners run into trouble when the adjustable rate mortgage adjusts (hence the name) to higher interest rates.
In many cases, such adjustments can greatly increase the size of the overall mortgage payment, which catches a lot of homeowners off guard. In this guide, we will examine the adjustable rate mortgage in more detail. After reading this guide, you will better understand the ARM loan and will be able to make wise decisions about such loans.
What Is an ARM?As the name implies, an adjustable-rate mortgage differs from a fixed rate mortgage in the way it adjusts to a new interest rate at some future point in time. Fixed rate mortgage loans carry the same interest rate through the entire life of the loan. So the interest rate you would pay in Year 1 would be the same rate as years 5, 10, 15 ... all the way through the end of the loan's term. On the other hand, with an adjustable rate mortgage, the interest rate will change periodically. This can cause payments to go up or down, depending on the prevailing rate at the time of adjustment (and other factors).
In other words, an adjustable rate mortgage is a loan with an interest rate that changes at some point in the future. Most of the time, ARM loans start off with a lower monthly payment than a fixed rate mortgage. But keep the following points in mind:
Unlike a fixed rate mortgage, the payments on an adjustable rate mortgage can change. This can increase the size of your mortgage, sometimes significantly.
You cannot predict what the interest rates will do three or five years from now, when your ARM loan adjusts.
It's possible that you could eventually owe more money than you borrowed.
If you want to pay off your ARM early to avoid payment increases, many lenders will charge a penalty fee for it.
Shopping for an Adjustable Rate MortgageWhen shopping for a mortgage, it's important to compare the rates and terms offered by different lenders. It's like anything else in life -- only by shopping around can you find the best deal. These days, comparing one adjustable rate mortgage to another can be confusing. That's because you have to understand the concepts of index, margin, caps, payment options, etc. It is beyond the scope of this article to show comparison examples, data charts, etc. But you can get plenty of those from the Federal Reserve's tutorial on ARM loans, available through the link below:http://www.federalreserve.gov/pubs/arms/arms_english.htm
Primary Advantage of an ARM LoanThe biggest advantage of an adjustable rate mortgage is the lower initial interest rate. Most lenders charge lower initial rates for an ARM loan than they charge for fixed rate mortgages. And since the interest rate is a key ingredient of the mortgage payment, this would in turn lower the mortgage amount you have to pay each month. For many first-time home buyers, this can be a big selling point for the adjustable rate mortgage. But there is also a key disadvantage to these loans.
Primary Disadvantage of an ARM LoanAs we have discussed, the characteristic that makes an adjustable rate mortgage unique is that the interest rate adjusts periodically. When and how often the loan adjusts is something you will know in advance, because the lender is required by law to tell you those things. But the amount it adjusts will remain an unknown variable, because nobody can predict what interest rates will do in the future. This is the primary disadvantage of an adjustable rate mortgage, the uncertainty of interest rate changes / increases.
Key Ingredients of the Adjustable Rate MortgageTo get an even better understanding of how the ARM loan works, you should understand the key ingredients of such a loan.
* Initial Rate - We have already discussed how an adjustable rate mortgage loan starts off with a relatively low interest rate in the beginning. This is known as the initial rate, and it will stay in place for a limited period of time -- usually 1 to 5 years. But here's the thing to remember. On most adjustable rate mortgages, the initial interest rate (and by extension the initial payment amount) can vary greatly from the rates and payments you would face later in the loan's term.
* Adjustment Period - This is just what it sounds like, the period during which your adjustable rate mortgage adjusts to a new interest rate (and payment amount). Usually, the interest rate on an ARM loan will change every month, quarter, year, 3 years, or 5 years, with the latter options being the most common. A loan with an adjustment period of 1 year is called a 1-year ARM, which means the interest rate and payment can change once per year (after the initial period).
* Loan Descriptions - The law requires that mortgage lenders must give you written information on each type of ARM loan you are interested in. The information they provide must explain the term / conditions for each adjustable rate mortgage, as well as details about the index and margin (which determine the interest rate), how your rate will be determined, how often the rate will change, caps (or limits) on rate changes, plus an example of how high your monthly mortgage payment might go based on adjustments.
* Interest Rate Caps - Interest-rate caps are an important concept in the world of adjustable rate mortgage loans. A cap is just what it sounds like ... a limit on the amount your interest rate can increase. Interest rate caps come in two versions: 1. Periodic adjustment caps limit how much the interest rate can go up or down from one adjustment to the next (after the first adjustment). 2. Lifetime caps limit the interest-rate increase over the life of the loan. Lifetime caps are required by law, so you'll find them on nearly all adjustable rate mortgage loans.
* Payment Caps - Many ARM loans also cap (or limit) the amount your monthly payment can increase at the time of each adjustment. So if your adjustable rate mortgage loan had a payment cap of 8%, your monthly payment would not increase more than 8% over your previous payment amount. Be Careful Choosing an ARM Loan
Avoiding Payment ShockIn your financial planning, the biggest thing you want to avoid is payment shock. Payment shock is what happens when your mortgage payment rises steeply during a rate adjustment. For example, let's say you took out an adjustable rate mortgage for a $200,000 loan. During the first year of an ARM, you'll usually enjoy a very low interest rate. That's the primary benefit. So let's say you start out with a 4% interest rate that later goes up to a 7% interest rate (after the second year). During the first two years, the mortgage payments would be somewhere in the neighborhood of $950 per month. But after the adjustment at year two, those payments would go up to more than $1,300. That's a big difference.
Percentage points may not seem like much by themselves. But when you plug them into a mortgage calculator, you can see how significant they really are. So if you are considering an adjustable rate mortgage, just be wise about it and think long-term. If you plan to stay in the home and hold the loan for many years, make sure you have a plan for when the rate adjusts. Or make sure you can handle a significantly larger mortgage payment.
ConclusionHere's what we want you to take away from this lesson. Adjustable rate mortgages offer benefits up front (during the initial period) in the form of lower interest rates. But they are full of uncertainty later on, and this can lead to unpleasant financial surprises. If you understand this concept, and you plan to sell the home a few years down the road, an ARM loan might be a good option for you.
But if you're not comfortable with the uncertainty of rate and payment adjustments, or if you plan to stay in the home (and hold the mortgage) for many years, an ARM loan might be a bad idea.
About the Author: Brandon Cornett publishes a network of websites related to home buying and mortgages. His latest website offers tips on mortgage refinancing and related topics. Learn more at http://www.mortgage-refinance-advice.com
For more information about Florence Oregon Real Estate give me a call 541-991-7794 or visit my website www.maureensellsflorence.com
Wednesday, May 28, 2008
Renting? 4 Reasons to Consider Renters Insurance
By Marshall Loeb
RISMEDIA, May 28, 2008-With so many college graduates migrating from the dorms this month, one item they may neglect in their move to the real world is a critical one: renters insurance. Renters insurance is an often-ignored insurance that covers everything from personal property to personal liability.
If you’re renting for the first time, or have been renting for years without insurance, you’ll want to consider purchasing some insurance. From MSN.com, here are four myths about renter’s insurance that might convince you to buy a plan:
1. My landlord’s covered. In most cases, a landlord’s insurance covers only structural damage to the building itself-and many landlord policies don’t even go that far if the damage is caused by a tenant. If you leave the tub running and it turns your floor into cardboard and dribbles downstairs, damaging your neighbor’s couch, you may be liable for the whole drippy mess. If your building went up in flames, your landlord’s coverage would include repairs, but only to the building, not to the possessions of tenants.
2. It’s out of my price range. Is $10 to $20 per month too much? For lower rates, you can raise the deductible. For more protection, you can pay more for replacement cost coverage where the reimbursement is based on today’s replacement cost rather than original value.
3. I’m in a great building and I’m not worried about security. Renters insurance extends beyond on-premise theft and hazards. If your suitcase is stolen while you’re on vacation, you’ll likely be covered. Same with property stolen from your car. If you’re prone to barroom brawls you might need more help than renters insurance, but you’ll probably be covered if you hurt someone. Speaking of injuries, you’ll also likely be protected if someone slips and sprains their ankle at your annual dance-a-thon; you may even receive compensation for legal defense costs in the case of a lawsuit.
4. My stuff isn’t really worth much. You might be surprised at how quickly all those books, CDs and kitchen appliances add up.
RISMEDIA, May 28, 2008-With so many college graduates migrating from the dorms this month, one item they may neglect in their move to the real world is a critical one: renters insurance. Renters insurance is an often-ignored insurance that covers everything from personal property to personal liability.
If you’re renting for the first time, or have been renting for years without insurance, you’ll want to consider purchasing some insurance. From MSN.com, here are four myths about renter’s insurance that might convince you to buy a plan:
1. My landlord’s covered. In most cases, a landlord’s insurance covers only structural damage to the building itself-and many landlord policies don’t even go that far if the damage is caused by a tenant. If you leave the tub running and it turns your floor into cardboard and dribbles downstairs, damaging your neighbor’s couch, you may be liable for the whole drippy mess. If your building went up in flames, your landlord’s coverage would include repairs, but only to the building, not to the possessions of tenants.
2. It’s out of my price range. Is $10 to $20 per month too much? For lower rates, you can raise the deductible. For more protection, you can pay more for replacement cost coverage where the reimbursement is based on today’s replacement cost rather than original value.
3. I’m in a great building and I’m not worried about security. Renters insurance extends beyond on-premise theft and hazards. If your suitcase is stolen while you’re on vacation, you’ll likely be covered. Same with property stolen from your car. If you’re prone to barroom brawls you might need more help than renters insurance, but you’ll probably be covered if you hurt someone. Speaking of injuries, you’ll also likely be protected if someone slips and sprains their ankle at your annual dance-a-thon; you may even receive compensation for legal defense costs in the case of a lawsuit.
4. My stuff isn’t really worth much. You might be surprised at how quickly all those books, CDs and kitchen appliances add up.
Nifty Interactive Map Shows What's In Season at Your Grocery Store
Foodie site Epicurious has a great map for anyone who's ever drawn a blank when asked what's in season or "good right now" at their local markets. Click a month, choose your state, and you'll get a pop-up list of stuff grown in your own neck of the woods (or at least some woods closer to home). Roll through the list, and you'll get links to recipes and details on each ingredient. The Flash-based map is a handy starting point for creating a fresh-as-can-be menu and learning more about your state's culinary treasures.
For information about Florence Oregon Real Estate give me a call 541-991-7794 or visit my website www.maureensellsflorence.com
For information about Florence Oregon Real Estate give me a call 541-991-7794 or visit my website www.maureensellsflorence.com
Tuesday, May 27, 2008
Get Fired Up - 7 Tips to Help You Get Ready for the BBQ Season
RISMEDIA, May 28, 2008-The grilling season is heating up and regardless of whether you’re crazy about charcoal or are gaga over gas grills, you need to make sure your grill is in good working order before heading out to the patio with the brats, burgers and buns.
“Don’t treat your grill like a second-class culinary citizen. It’s an appliance just like your stove or refrigerator and with proper maintenance and care, it can give you decades of great use,” said Angie Hicks, founder of Angie’s List (www.angieslist.com), a provider of ratings on local service providers.
“One Angie’s List member thought his 40-year old grill was a goner one summer when he tried to fire it up. He called the store where he’d bought it and not only was his service call made by the same technician who installed it originally, but that expert found a way to repair it and the grill is still in use today,” Hicks said.
While emergency calls can be made, it’s best to have a yearly service call to ensure your grill is in good shape.
The lifespan of a grill varies greatly, depending on how well-constructed it is. Typically, you get what you pay for. Regardless of price, replacement parts are available for most grills. It’s time to replace your grill when its casting (the lid and bowl) is rusted.
Angie surveyed dozens of highly-rated grill experts to help make sure your barbecue bash doesn’t flame out.
1. Clean and spider free: Before you fire it up for the season, give your grill a good scrub to get rid of food, grease and - spider webs. Spiders are attracted to the smell of propane and they can take up residence in the venturi tubes and valve openings, blocking air and gas flow and leading to uneven cooking and possible safety hazards.
2. Annual checkup: Just like your car, annual service checks on your grill are a good idea and most warranties require them.
3. Test drive: Give your grill a test run before the day of the big barbecue to make sure everything is in good working order. That way, if it does need a new part or repair, you’ll have it working in time for the big cookout.
4. Fuel check: Check that you have enough gas or coals for your grill before you fire it up. You can add a gauge to your propane tank to help detect levels. For charcoal users, generally use about 30 coals per pound of meat, with the charcoal extending about one inch beyond the area where the food is.
5. Low salt diet: Avoid seasoning while grilling. Salt acts as a corrosive and can help contribute to rust.
6. Keep it clean. Once you’ve pulled the food from the grill, allow any excess food to burn off and then clean the grill with a brass bristle brush. Avoid using a stainless steel brush on a porcelain-enamel finish. Clean the grill while it’s still warm. It’s far easier to clean than waiting until food and grease settles and hardens. Clean the drip pan regularly.
7. Protect your grill with a water-resistant cover when not in use. During colder months, store it out of the elements.
According to the company, Angie’s List is where consumers share their ratings and reviews on local service providers in more than 330 different categories. Currently, more than 650,000 consumers across the U.S. rely on Angie’s List to help them find the right professional for the job they need done. Members have unlimited access to the list via Internet or phone; receive the award-winning Angie’s List magazine, which includes articles on home improvement and maintenance, consumer trends and scam alerts.
For more information, visit http://www.angieslist.com.
“Don’t treat your grill like a second-class culinary citizen. It’s an appliance just like your stove or refrigerator and with proper maintenance and care, it can give you decades of great use,” said Angie Hicks, founder of Angie’s List (www.angieslist.com), a provider of ratings on local service providers.
“One Angie’s List member thought his 40-year old grill was a goner one summer when he tried to fire it up. He called the store where he’d bought it and not only was his service call made by the same technician who installed it originally, but that expert found a way to repair it and the grill is still in use today,” Hicks said.
While emergency calls can be made, it’s best to have a yearly service call to ensure your grill is in good shape.
The lifespan of a grill varies greatly, depending on how well-constructed it is. Typically, you get what you pay for. Regardless of price, replacement parts are available for most grills. It’s time to replace your grill when its casting (the lid and bowl) is rusted.
Angie surveyed dozens of highly-rated grill experts to help make sure your barbecue bash doesn’t flame out.
1. Clean and spider free: Before you fire it up for the season, give your grill a good scrub to get rid of food, grease and - spider webs. Spiders are attracted to the smell of propane and they can take up residence in the venturi tubes and valve openings, blocking air and gas flow and leading to uneven cooking and possible safety hazards.
2. Annual checkup: Just like your car, annual service checks on your grill are a good idea and most warranties require them.
3. Test drive: Give your grill a test run before the day of the big barbecue to make sure everything is in good working order. That way, if it does need a new part or repair, you’ll have it working in time for the big cookout.
4. Fuel check: Check that you have enough gas or coals for your grill before you fire it up. You can add a gauge to your propane tank to help detect levels. For charcoal users, generally use about 30 coals per pound of meat, with the charcoal extending about one inch beyond the area where the food is.
5. Low salt diet: Avoid seasoning while grilling. Salt acts as a corrosive and can help contribute to rust.
6. Keep it clean. Once you’ve pulled the food from the grill, allow any excess food to burn off and then clean the grill with a brass bristle brush. Avoid using a stainless steel brush on a porcelain-enamel finish. Clean the grill while it’s still warm. It’s far easier to clean than waiting until food and grease settles and hardens. Clean the drip pan regularly.
7. Protect your grill with a water-resistant cover when not in use. During colder months, store it out of the elements.
According to the company, Angie’s List is where consumers share their ratings and reviews on local service providers in more than 330 different categories. Currently, more than 650,000 consumers across the U.S. rely on Angie’s List to help them find the right professional for the job they need done. Members have unlimited access to the list via Internet or phone; receive the award-winning Angie’s List magazine, which includes articles on home improvement and maintenance, consumer trends and scam alerts.
For more information, visit http://www.angieslist.com.
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