Wednesday, January 31, 2007

Home Equity Advantages, Part 1

Home equity is the most significant source of wealth for many homeowners. Find out how to make your home equity go to work for you.

Once you purchase a home and begin making payments, you immediately begin building equity. Of the 69% of U.S. households who own their own homes, 24.7% have accumulated 100% equity.*

Your home is the most valuable asset you may ever own. Usually, it is an untapped resource that can be used to your benefit. Non-traditional refinancing products allow homeowners to lower their monthly mortgage payment and borrow money to strengthen their financial position.

Cash-out (or "equity release") refinancing allows homeowners to refinance their existing mortgage and receive a portion of their equity back, to use for such things as remodeling, consolidating higher-interest debts (such as credit cards or loans), or investing money in places that may offer a higher return.

Tomorrow, I'll tell you more about these types of programs.

*Source: 2005 Census Bureau and HUD figures.

Tuesday, January 30, 2007

Working With Your Realtor®, Part 2

Here are some more tips on working with your Realtor®:

Be Accessible.
Speed is often important. Make sure your agent understands that you want to be contacted at once if a showing is requested. Be sure that the home is already ready to be shown to accommodate last-minute requests for a showing. Provide phone numbers (home, office, cell) where you can be reached at during various times of the day.

If an offer comes in, your Realtor will need to respond to the buyer quickly. Be sure that you’re accessible even if you’re out of town, on vacation, or on a business trip.

Assert Yourself.
Agents are salespeople - they typically have strong and outgoing personalities. Don't forget, however, that it is your home sale. Insist on personally reviewing all offers and on making your own decisions about which offers to consider. However, you also need to…

Listen to suggestions.

As you prepare your home for sale, don't rely solely on your own judgment. It's hard to be objective when you're the owner. Your Realtor will have helpful, professional tips on how to make your home more marketable.

Stay unemotional during negotiations.
Selling your home can be emotionally charged, but don't let that stand in the way of making a deal. Have a business-like attitude during the process and remember that the buyer is not your enemy. (Very often, the buyer of your home is someone like yourself who’d you’d be very happy to have as a neighbor.) Seemingly confrontational negotiations are part of the process and are never intended for you to take personally.

Getting the most money, for the least hassle, is the name of the game. By forging the best possible relationship with your Realtor, you’re well on your way to success.

Friday, January 26, 2007

Working with Your Realtor®, Part 1

Buying or selling real estate is probably the most important and potentially rewarding financial transaction you'll make in your life. The way you sell your house can greatly impact how much cash you can get for it. Once you have chosen your Realtor®, here are ways you can facilitate the process:

Use Your Realtor's Experience.
Most Realtors are extremely knowledgeable about the local real estate market. This is a valuable resource, so use it well. Your real estate professional can help you decide your selling price, promote your property, and evaluate offers.

Communicate
Even the best agent is not a mind reader. Tell your agent what types of offers you’re willing to accept, when your home is available for showings, whether you want an open house, what changes you’re willing to make to the home’s interior and exterior, whether you want to sell the house “as is”, whether you have a pressing deadline for the sale, etc.

Get your records in order.
Potential buyers are often interested in what your monthly utility bills and other home maintenance expenses are. Be sure to have these numbers ready. Also, gather together any owner’s manuals and warranties you may have for your appliances.

Next week, I'll share more tips for working with your realtor.

Thursday, January 25, 2007

Who's Buying Second Homes in NH?

The most recent (2005) U.S. Census Bureau population estimates suggest that demand for housing in New Hampshire from retirees and second home owners is likely to remain strong for quite some time. The Bureau estimated a 15,000-person increase in New Hampshire residents ages 65 or older. That’s a 10 percent rise from 2000 to 2005, compared to no increase at all in the other five New England states.

The age group with the highest incidence of second home ownership are people ages 55 to 64. The Bureau estimated a 25 percent jump in that age group, both nationwide and in New England. Most of this age group are Baby Boomers (who are now ages 43 to 61). Here’s what Dr. Karl Case, a noted real estate economist, said about them in a recent report for the Boston Federal Reserve Bank’s New England Public Policy Center:
"Boomers look at housing as previous generations looked at cars and TVs: rather than owning just one house, in many cases they own two, and sometimes three or four."


- Source: Northern New England Real Estate Network and NH Association of Realtors

Wednesday, January 24, 2007

Buying Soon? Worried About Your New Home's Value Dropping?

According to recent industry figures, about 18% fewer homes were sold in 2006 than in 2005. The average sale price was $306,000 in 2006 (compared to $311,000 in 2005).

About 18% fewer condominiums were sold in 2006. The average 2006 sales price was $207,000 (vs. $204,000 in 2005).

The relative stability of prices here in New Hampshire suggests that potential Spring 2007 buyers may not be as concerned about a future decline in the value of their home as they might have been in mid-2006.

Finding Hidden Value, Part 2

Look for a house with cosmetic blemishes that cost little to clear.

A home may be unattractive in ways that are surprisingly easy to cure. For a small sum, you can redo the wood surfaces of worn kitchen cabinets, worn countertops, and beat-up bathroom vanities and paint the front door. The trick to finding hidden value in a home is to distinguish between readily solvable and monstrously demanding home renovations.


Recognize the importance of subjectivity in housing choice.

Some agents point out that spending too much time bargain-hunting can waste your energy. They urge buyers to avoid any quest for hidden value that causes them to be blinded to their personal housing preferences. Looking for a house is a very individual quest. Don’t focus on the bargain at the expense of finding what you want.




Join Compass Mortgage’s NH First-Time Homebuyers Club

Our NH First-Time Homebuyers Club makes it easier to purchase a New Hampshire property. (Better yet, it’s absolutely free!) Members can receive discounts and credits worth $600 or more.

To join, call Charley Farley at Compass Mortgage (603) 471-9300 today or fill out the online form.

Tuesday, January 23, 2007

Finding Hidden Value, Part 1

Want to get the most house for your money? Here are some guidelines for buyers:

Look for that special little enclave inside an expensive neighborhood.

Home buyers have long been encouraged to seek the least expensive house in the most expensive neighborhood they could afford. This is because property values in that area will rise more swiftly than those in a low-cost neighborhood. In fact, the value of the land could eventually outstrip the value of the building.

Search for a home with extra land that could be sold separately.

Do you have your eye on a nice neighborhood where the houses are attractive, but years are quite small? Yet within that area, you’ve located a property featuring atypically larger grounds? The chances are you’ll pray a premium for the extra land. Still, that premium could be less than the true value of the home if zoning laws let you divide the land into two pieces and sell one portion.

Visit again tomorrow for more tips on finding hidden value.

Monday, January 22, 2007

How to Fix Your Credit

If you have reason to believe bogus or inaccurate information appears on your credit report, YOU HAVE THE RIGHT under the Fair Credit Reporting Act to dispute inaccurate information that might harm your credit rating.


1) Get a free copy of your credit report at www.annualcreditreport.com.


2) Identify errors.

Look at your Personal Credit Report closely. Check the accuracy of:


  • Personal data: Name, address, Social Security number
  • Employment: Current employer and address, previous employer
  • Public records: Judgments, liens, and bankruptcy
  • Account info: Open date, balance, date of lates


3) Contact Creditors

You should begin the dispute process by contacting any creditors responsible for any inaccuracies on your report. Come to an agreement with the creditor on how the matter has been or can be resolved before you file a dispute with the credit repositories. Get something in writing or get a name and phone number for future reference.

THINK ABOUT THIS: If you dispute the inaccuracy with the repositories first, they are going to contact the creditor who is going to confirm you still owe the money or that the late payment info is accurate.

By the way, once the creditor is made aware of an inaccuracy, they should agree to update the repositories themselves – If the inaccuracies have a significant effect on your credit rating, we suggest following up by filing a dispute with the credit repositories yourself.


4) File a Dispute

Online: We recommend you dispute inaccuracies online directly with the repositories (TransUnion, Experian, and Equifax); it’s the fastest way. You’ll be able to check the status of your dispute investigation online and you will be notified by e-mail when the results of your dispute are ready to be viewed.

By Mail: Otherwise, file a dispute in writing: it’s a good idea to attach a marked up copy of your “Personal Credit Report” and attach copies of documents that support your position.


5) How long does it take?

Soon after you file a dispute, the Credit Repositories will investigate your claim by contacting the creditors by phone or through any number of automated systems. Often the matter is resolved in a few days but the creditor does have up to 30 days to respond. (Remember, if you filed the dispute online you can check on the status online anytime in the process) Once the investigation is concluded, you will be provided an updated report. Getting your credit to reflect accurately will often require more than one try.

If your credit still reflects inaccuracies, confirm the information directly with the creditor and go back to step 3. Or call Compass Mortgage at (603) 471-9300 for further assistance.

Friday, January 19, 2007

NH First-Time Homebuyers Club®

Helping You Become a Successful Homeowner

Becoming a New Hampshire homeowner is one of the most important decisions you’ll ever make, because it will shape your future (and your family’s). Compass Mortgage’s NH First-Time Homebuyers Club® makes the home purchasing process an easier one.
Even better, it’s absolutely free!


Members Receive:

  • Free Credit Report
  • Free Credit Scores
  • Free Credit Analysis
  • Free Pre-Approval
  • Free Home Buyer Education
  • Your Choice from Several First-Time Homebuyer Loan Programs
  • Free Home Evaluation Forms
  • Access to Free Realtor® Representation
  • Complementary Access to MLS
  • Access to Foreclosure, Seized Property, and FSBO lists
  • Coaching on How to Negotiate Your Offer
  • Discounted Home Inspection
  • Guaranteed Closing Costs
  • Up to $600 Other Closing Costs Credits (based upon qualification)


To sign up, visit www.CharleyFarleyHomeLoans.com.

Thursday, January 18, 2007

Advantages of Getting Pre-Approved

Buyers who arrange their financing first have several distinct advantages:



  • Reduce the stress of home shopping. Buying a home can be frustrating when you’re not sure how much you can afford. Your pre-approval means you can afford the home you’re looking at. So when you find your “dream home”, you know you’ll fit the financing requirements.



  • Save time, by looking only at homes that match your buying power. Pre-approval will also help your real estate professional know within what price range you should search - - and it gives you a great negotiating tool when you are ready to make an offer.



  • Certainty of financing. Sellers won’t risk taking their home off the market only to find out the deal is going to fall through 30 days later. When a pre-approved buyer makes an offer on a home, real estate agents will encourage a seller to accept it. (In some cases, a pre-approved mortgage could even make the difference between getting the home of your dreams or losing out to someone else.)



  • Close within days! Once you find the home you want and your offer is accepted, you may be able to close soon afterward! This is because all the credit checking -- and other steps that most buyers go through when obtaining a mortgage -- have already been completed.



You’ll need a mortgage to buy your new home, so take the first step today: get pre-approved! After that, it’s time for the fun part: looking for homes!

Wednesday, January 17, 2007

More Reasons to Get Pre-Approved

Pre-approval on your home loan helps you determine your buying power and lets you shop with confidence

Chances are, you have some idea of how much home you can afford. But are you sure? You might be able to afford more than you think…

There is an easy way to find out: get pre-approved. Being pre-approved means that your credit has been reviewed and you have been approved for a specific loan amount (subject to certain conditions), for a limited period of time. Our pre-approval service is free of charge.

When you’re pre-approved, you’ll have the peace of mind that comes from knowing the details about your loan -- including the interest rate, monthly payment, closing costs, etc. -- before you start house hunting.

Once you are pre-approved, Compass Mortgage will issue you a letter stating that you are pre-approved for a mortgage loan up to a certain amount. Your Realtor® will request a copy of this letter (typically before they begin showing you homes) and will include a copy with any offer that you make on a property.

Tomorrow, we'll look at the distinct advantages you have as a homebuyer by getting pre-approved.

Tuesday, January 16, 2007

Conventional vs. Government Loans, Part 3

Government Loans

Government loan programs make homeownership possible for people who might not qualify for conventional mortgage programs. The insurance/guarantee provided by the U.S. government on these loans makes lenders more willing to work with someone who might not completely fit their usual loan qualification requirements.

They include:



  • VA loans, which are guaranteed by U.S. Dept. of Veterans Affairs. These allow veterans and service personnel to obtain home loans with favorable loan terms, usually without a down payment. Additional information on VA loans can be found here.



  • FHA loans, like VA loans, were created by the U.S. government to encourage homeownership throughout the country. FHA loans also have lower down payment requirements (and are easier to qualify for) than conventional loans. Details on FHA loans can be found here.



  • RHS loans are sponsored by the Rural Housing Service. If you live in a rural area or small town, you may qualify for one of these low-interest loans.


Only approved lenders such as Compass Mortgage can offer these government-insured loans.

Monday, January 15, 2007

Conventional vs. Government Mortgage Loans, Part 2

Conventional loans may be conforming and non-conforming:


Conforming loans have terms and conditions that follow the guidelines set forth by Fannie Mae and Freddie Mac. These two agencies provide a continuous flow of affordable funds for home financing to Mortgage Bankers like Compass Mortgage.


Non-conforming loans include:



  • Jumbo loans, which are above the maximum loan amount established by Fannie Mae and Freddie Mac. Because they are bought and sold on a much smaller scale, they usually have a higher interest rate than conforming loans.




  • B/C Loans: Loans that do not meet the borrower credit requirements of Fannie Mae and Freddie Mac are called “B”, “C” and “D” loans (vs. “A” conforming loans). B/C loans are offered to prospective homeowners who may have recently filed for bankruptcy or foreclosure, or who have had late payments on their credit reports. These borrowers may have to pay higher fees and/or a higher interest rate on non-conforming loans, because they represent a higher risk. B/C loans are expected to be a form of temporary financing until the borrowers can qualify for and refinance to a lower rate conforming "A" program.


Next time, we'll look at government loans.

Friday, January 12, 2007

Conventional vs. Government Mortgage Loans, Part 1

There are many types of home mortgages from which New Hampshire home buyers can choose. The type you ultimately select usually depends on:

  • the length of time you think you'll be in your new home
  • your other financial obligations
  • your credit history, and
  • your long-range goals





Conventional Loans

A conventional loan is simply mortgage program sponsored by a quasi-government agency (Fannie Mae, Freddy Mac, etc.) or a company that sells mortgage backed securities on the bond market. We offer hundreds of conventional programs that come in different forms:


  • fixed-rate
  • adjustable
  • hybrid, combination, or other type


At least one is bound to be just right for you; often, our borrowers have several programs from which to choose.

Conventional loans may be easier to qualify for than government-backed loans, and they:


  • often require less paperwork
  • typically have high maximum loan limits
  • have a variety of documentation options


Next time, we'll discuss conventional loans in greater detail. After that, we'll look at government loan programs.

Thursday, January 11, 2007

Mortgage News Aggregator

The Industry News section of our web site is a news feed posting information about the mortgage industry as a whole.

Prefer to view the latest mortgage rates? They're right here on the Compass Mortgage Web site home page.

Wednesday, January 10, 2007

Four Things You Need In Order to Buy a Home: #4

4) Collateral – The Home or Property


This is the fun part. Now we can talk a little about your new home. For starters, the home you purchase must be:


  • A residential property (someplace to live)
  • Structurally sound (we’ll talk about home inspections later)
  • Worth what you are paying for it (what appraisals are for)



Just so you know: we mortgage lenders love to lend on single family homes. We like condos and even an occasional two-family property. We also finance three- and four-family properties, but a lot of the rules are different with respect to cash and credit.

Tuesday, January 9, 2007

Four Things You Need in Order to Buy a Home: #3

3) Capacity: For how much do you qualify?

That depends on two things: how much your income is and how much monthly debt (auto payments, credit cards, child support, student loans etc.) you have.

As a rule, lenders use a "ratio analysis" which means you should not have more than 30% or 40% or 50% of your reliable monthly income going toward monthly debts including the total mortgage payment. Depending on other factors, you may be able to qualify for a "no income verification loan". Getting answers to these questions is what getting "pre-qualified" or "pre-approved" is all about.



It's fast, easy, and FREE to get preapproved for a loan. To begin,
click here

Monday, January 8, 2007

Four Things You Need in Order to Buy a Home: #2

2) Credit

Credit history shows your willingness to pay your debts. A credit report will provide a creditor (mortgage lender) with a seven - 10 year history of your credit.

Lenders use your credit history to determine if you have paid your other creditors on time and if you are likely to pay them back. The more credit history you have of paying your creditors on time, the better your financing choices will be. (It should be noted that you don’t necessarily have to have traditional credit history to get a mortgage: we may be able to use landlord and utility references.)

Less than perfect credit? A few “dings” on your credit will not prevent you from getting a mortgage. Most importantly, your good credit history may better represent you as a favorable risk than a few late payments. Even if you have significant derogatory credit, there are temporary mortgage solutions that you can later refinance as your credit improves over time.

Friday, January 5, 2007

Four Things You Need in Order to Buy a Home: #1

Purchasing a home is an attainable goal for most people. There are several loan programs available in New Hampshire that are designed to maximize the opportunity and affordability of home ownership for all who desire to do so. Even so, there are a few things you'll need, and over the next several posts, I'll discuss them, starting with:


1) Cash

How much will you need? You'll need cash for:
  • Down payment - Usually a percentage of the purchase
  • Closing costs - One-time fees like: transfer taxes, attorney, appraisals etc.
  • Pre-paid expenses - Insurance, property taxes, and maybe condo dues


No Money? Not a big problem. Even if you don’t have a 401K or and you can’t get a gift from a friend or relative, you may be able to buy a home. There are many first-time home buyer programs designed specifically to minimize your cash requirements. For instance, 100% finance programs are common and a few even allow you to roll your closing costs onto the amount you are borrowing – usually called 103% or 105% or 107% programs.

Stay tuned to learn what else you'll need in order to purchase your next home....

Thursday, January 4, 2007

Avoid PMI on a New Mortgage

If you’re considering a new mortgage, you may not have to pay private mortgage insurance(PMI). Here are some options to consider:

  • Put 20% down. If you don’t have 20% to put down, you can avoid PMI by getting a piggyback loan -- a second mortgage that allows you to make the equivalent of a 20 percent down payment by borrowing part of the down payment in the form of a 2nd mortgage. (For example, you might want to put 10 percent down on your new home. To finance the rest, you obtain a first mortgage of 80 percent, and a second mortgage of the remaining 10 percent.) What’s more, a piggyback loan has an income tax advantage: You can deduct the interest from your taxable income, whereas the cost of PMI isn't deductible.
  • If you accept a higher interest rate on your mortgage loan, you could avoid PMI. (The rate increases generally range from 1/2 percent to 1 percent, depending on your down payment.) Because non-conforming or sub-prime loans do not conform to standard guidelines, they do not require PMI. And again, the mortgage interest is tax deductible.
  • Consider a purchase Home Equity Line Of Credit (HELOC). A HELOC is like a cross between a conventional mortgage and a credit card. With a HELOC, you qualify for a line of credit based on the amount of equity in your home. For purchases, the lender "pretends" that you own already own the house and gives you a line of credit for 100% of its value. You then use the money to actually purchase the property.

Wednesday, January 3, 2007

Stop paying PMI

With current laws, both consumers and lenders share responsibility to how long PMI coverage is required. If you have private mortgage insurance on your existing mortgage and you now have 20% equity (the difference between the loan amount and the market value of your home), you can get rid of PMI in two different ways:

  • Contact the PMI department at the toll free number shown on your mortgage statement. Tell them you have 20% equity and want to drop the PMI. They will explain the requirements of doing so, including instructions on how to secure an updated appraisal.
  • Refinance to a new mortgage program that won’t require PMI.

Tomorrow, I'll let you know how you can avoid PMI on a new mortgage.

Tuesday, January 2, 2007

What is PMI?

Many New Hampshire home buyers make down payments of less than 20 percent and have to pay private mortgage insurance (PMI). PMI is a type of insurance policy that reimburses your lender if you default on your mortgage.

Private mortgage insurance charges vary depending on the size of the down payment and the type of loan. Example: A borrower buying a house with no down payment will pay a higher PMI than a borrower putting down 10%. PMI adds thousands of dollars to the cost of your home over time.

PMI isn’t necessarily a bad thing because it enables home buyers with less than a 20% down payment to get an interest rate that is just as low as if they did have the 20% down.

Tomorrow, I'll tell you how to get rid of PMI.