Mortgage and Finance – Cooper Realty Associates

Pre-Qualification vs. Pre-Approval

It’s a good idea to be pre-approved for a mortgage before you begin house hunting. In fact, many realtors won’t even work with you until you’ve gone through this process. There is a bit of confusion out there though, about the difference between pre-qualification and pre-approval. Many times these terms are used interchangeably, but they are, indeed, different. Pre-qualification is basically a letter from a loan officer saying how much they believe you will be able to borrow based on your income, debt, work history, etc. Pre-qualification is given without pulling credit scores, and is a “good faith estimate.” However, even if you are pre-qualified you can still have trouble with your financing, since nothing about a pre-qualification is guaranteed.

Pre-approval takes everything a step further and involves pulling your credit report (which typically involves a small, non-refundable fee). This process involves a lot more paper work, but shows that the bank is ready to work with you should you find a home that you love. It is important to note that pre-approval does not guarantee a mortgage, but it does guarantee that the bank is ready and willing to work with you which shows that you are a serious buyer.
Many realtors will work with you if you are pre-qualified, but it is really in your best interest as a buyer to be pre-approved before you start the house hunting process. It is heart breaking to fall in love with a home and then find out that it is way over your budget when you try to finance it. When you’re ready to start house hunting, shop around for a mortgage and find a broker that you like and trust. Once you have your pre-approval letter it shows your agent and the sellers that you are a serious buyer worth working with.

Thinking of buying of selling a home in Sussex County? Give us a call at Cooper Realty Associates and put us to work for you – 302-644-2266.

Types of Home Loans

If you’re in the market for a home, chances are high that you are not paying cash for it which means you will need to get a mortgage. There are two basic types of mortgages, conventional and government sponsored.

Conventional mortgages are come in two basic varieties, fixed rate mortgages (FRM) and Adjustable Rate Mortgages (ARM). As the name suggests, fixed-rate mortgages have a set interest rate that stays the same throughout the length of the loan. Usually fixed-rate loans are paid off over either 15 or 30 years. These tend to be the most popular home loans.

In an adjustable rate mortgage the interest rate rises and falls throughout the length of the loan. Typically, adjustable rate mortgages have a lower interest rate than fixed-rate mortgages, especially for the first year or so, but they can be risky, depending on the market and how long you plan to stay in your home.

With conventional mortgages, you are typically required to make a down payment of twenty percent. Buyers who aren’t able to put that much down are required by their lenders to pay for private mortgage insurance (PMI) until you’ve paid down a full twenty percent of the home’s value. PMI increases the monthly payment, and should usually be avoided if at all possible.

The other type of mortgage is though loan programs sponsored by the government. These include Federal Housing Administration (FHA) loans, Veteran’s Administration (VA) programs for veterans, and Rural Housing Service (RHS) programs for families living in rural areas. Government sponsored loans are intended for homebuyers with low income. Most of these programs require low down payments and have more lenient qualification terms than conventional loans. To finance a home through any government sponsored loan program, you still have to go through traditional banks or mortgage lenders to get your money. In these cases, the government does not actually lend the money, they just guarantee the loans.

Thinking of buying of selling a home in Sussex County? Give us a call at Cooper Realty Associates and put us to work for you – 302-644-2266.

Down Payment Advice

It’s always best to put 20% (or more) down on a mortgage when you are buying a home. The main reason for this is so that you can avoid private mortgage insurance (PMI) payments. PMI costs you a percentage of your mortgage depending on how close your down payment was to 20%. At first glance it might not sound like much, but over the course of a year PMI could cost you between $500-1500 or more depending on the sale price of your home and how much you put down. In addition to saving on PMI, putting 20% down can help you negotiate better loan terms and rates. Without putting a sizable down payment into your mortgage you will not be building equity in your home for a long time. If you can’t save 20%, saving as much as possible is definitely the best route.

Thinking of buying or selling a home in Sussex County? Give us a call at Cooper Realty Associates and put us to work for you – 302-644-2266.

Home Prices Are Up

Home prices have appreciated just over 10% in the past twelve months, which is great news for current sellers! This is actually the first time home prices have appreciated into the double digits percentage wise in seven years. According to a report accounting for 80% of the US housing market, appreciation is expected to drop and stabilize at around 6.5% in the next twelve months. Because homes are still affordable and the economy and job market are stabilizing in many areas, prices will continue to rise through the summer before beginning to drop off in the fall and winter, so if you’re considering a move, now might just be the perfect time to put your home on the market!

Thinking of buying or selling a home in Sussex County? Give us a call at Cooper Realty Associates and put us to work for you – 302-856-6434.

Mortgage Rates Are Rising

The average mortgage rate dropped to an all time low of 3.3% in 2012, and is now rising rapidly. In June, mortgage rates in the US averaged 4.35%, but for those interested in buying, even though mortgages are at the highest rate in two years, they are still a great deal. Economists estimate that these rates will keep rising along with the improvement in the economy, so if you’re looking to purchase or refinance, now’s is a great time to do so, before the window on low mortgage rates closes for good. Prices are rising in the housing market too, making this a great time for sellers for the first time in awhile.

Whether you’re buying or selling a home, we can help! Give us a call at Cooper Realty Associates and put us to work for you – 302-629-6693.

3 Rules For Flipping A House

The idea of flipping a home is less popular now than it was a decade ago, but it’s still out there. If flipping a home is something you’ve ever thought of, here are three tips for you:

1. Remember the 70% rule. In order to profit from your purchase, take the price that the home will sell for after renovations and factor 70% of it. Subtract your renovations from the 70% and that leaves you with the maximum price you should pay for the home.

2. Remember the rules. If you’re considering a short sale or REO because of a great deal, be sure to research the Fannie Mae and Freddie Mac guidelines that restrict resale of such properties within a set amount of time from the original sale.

3. Remember the inspection. Even though you intend to flip the home you buy, you should not forgo the home inspection. You will want to know if there are hidden problems that are more of commitment than you are financially prepared for.

Thinking of buying or selling a home in Sussex County? Give us a call at Cooper Realty Associates and put us to work for you – 302-629-6693.

Consider a 15 Year Mortgage

When you are buying a home, the industry standard is a 30-year mortgage. However, if you can swing it there are definite advantages to a 15 year mortgage instead. The biggest benefit of a fifteen-year mortgage is, of course, that you pay your home off in half the time and wind up saving a lot of money in interest. In addition you will also accumulate equity in your home faster as you pay off the principal, which could free you up to take out a home equity loan if needed. Of course, you shouldn’t bury yourself to be able to afford a fifteen-year mortgage. Remember that you don’t want to spread yourself too thin… your home should not be your only source of savings. You also want to make sure you can save for retirement and emergencies each month.

Thinking of buying or selling a home in Sussex County? Give us a call at Cooper Realty Associates and put us to work for you – 302-644-2266.

Reasons to Consider Refinancing

With interest rates still low and likely to rise this year, now is a good time to refinance if you bought your home more than a couple of years ago. Keep in mind, however, that most institutions have stringent refinancing criteria, so it may not be worth it unless you can refinance for a full 0.5% less than your current interest rate. Refinancing your mortgage at the same terms you have currently but with a lower interest rate (ideally 0.5-1% lower) will not only lower your monthly payment immediately, saving a bundle in interest in the long run. Another great refinancing option if you can afford a little bit of a higher monthly payment is to refinance from a 30-year loan to a 15-year loan. Although this means paying a few hundred dollars more each month for the duration of the loa5n, it can save a huge amount of interest over the life of your loan. Of course, refinancing is not a great option if you are not planning to stay in your current home longer than it would take you to recoup the cost of the loan, otherwise it can be a great money saving option both immediately and for the long-term.

Thinking of buying or selling a home in Sussex County? Give us a call at Cooper Realty Associates and put us to work for you – 302-644-2266.

Financial Tips

When you are in the market for a new home you are prepared to spend a huge chunk of money, but just because the bank offers you a $400,000 mortgage doesn’t mean that it is wise for you to take the full amount. Generally speaking, you should take at least 20% less than the bank offers you in order to protect your financial security. By purchasing a home at the very top of your budget, you risk being in a tight financial position for very many years in the future if anything should go wrong. Additionally, unless you are willing to take a risk, you should always go with a fixed-rate mortgage for a set period of time. A traditional 15 or 30 year mortgage will protect you against a jump in your monthly payment in the future. Finally, don’t get caught off guard by unexpected costs. In addition to the down payment and closing costs be prepared to pay appraisal fees, broker fees, loan application fees, inspection fees, plus ongoing costs like property taxes, homeowner’s insurance, homeowner’s association or condo fees, and hazard/flood insurance in addition to your monthly mortgage payment. To be best prepared for all of these costs, be sure that you keep a significant portion of cash available rather than using it all toward your down-payment. This will help insure better financial security for your family and your future.

Thinking of buying or selling a home in Sussex County? Give us a call at Cooper Realty Associates and put us to work for you –302-629-6693.

Paying Off Your Mortgage Early – Yes or No?

Paying down your mortgage early is a great thing to do, and can be considered a good investment for many homeowners. I, myself, am not a financial advisor, but I have culled several interesting articles that outline the pros and cons of paying off your mortgage early from several finance and real estate experts. First, check out this article, which outlines the benefits of mortgage repayment. Then, check out this article, which says basically the opposite thing! Finally, check out this article, which dispels some confusion over whether or not paying off your mortgage early is a good idea. Whether or not you should pay off your mortgage early is a personal decision that requires a lot of thought and discussion before it’s made. I know what my decision is, what’s yours?

Thinking of buying or selling a home in Sussex County? Give us a call at Cooper Realty Associates and put us to work for you – 302-644-2266.

The Effects of the Fiscal Cliff Bill on Real Estate Taxes

Thanks to the law passed earlier this year by Congress to avoid falling off the “fiscal cliff,” there are many advantages when it comes to real estate tax breaks.

Thanks to the law passed earlier this year by Congress to avoid falling off the “fiscal cliff,” there are many advantages when it comes to real estate tax breaks. First of all, thanks to this bill, the mortgage interest deduction remains the same for now. In addition, taxpayers with an AGI (adjusted gross income) of less than $100,000 per year can itemize and deduct all of their PMI, or mortgage insurance, payments. This deduction was last offered in 2011, but the bill put it back in play for all of 2012 and through the end of 2013. Next, the Mortgage Forgiveness Debt Relief Act was extended through the end of 2013, meaning that home owners who face a short sale or who receive forgiveness on their mortgage principal may exclude up to two million dollars of debt forgiveness from their taxable income. This is good news for those who are under water in their mortgages because it makes the options of short sales and loan modifications more attractive than foreclosure or bankruptcy. Finally, this bill brings back the $500 credit for making various energy-saving improvements to a principal residence through the end of 2013.

Thinking of buying or selling a home in Sussex County? Give us a call at Cooper Realty and put us to work for you – 302-856-6434.

Tips for Refinancing

With mortgage interest rates remaining so low, you may be considering refinancing. But keep in mind that refinancing is not for everyone. To figure out if it is right for you, begin by figuring out how long it will take you to recoup your closing costs if you refinance at a lower rate. If you can cut your interest by a significant amount, say a point or maybe even half a point, it might be worth it, but keep in mind that a new mortgage is going to carry thousands of dollars in closing costs, so even if what you’re paying monthly is lower, it will take time to break even. If you decide to go for it, be sure to shop around just as you would if you were in the market for a new mortgage. Rates can vary significantly from lender to lender, as do fees and customer service, so do research and find a lender you trust. Once you find a lender with the rate that you want, be sure to lock it in and hold them accountable to close your deal before the lock expires. Most locks last for 60 days. Finally, understand that although many lenders are advertising no or low closing-cost loans, all loans come with a price. Even if your lender is not charging you when you close the loan, rest assured that you are paying for the fees associated with your loan somehow, whether it is with traditional, up-front costs, rolled into your mortgage balance or in the form of a higher interest rate than you would otherwise receive. Educate yourself and ask your lender to lay out all the different options for you before accepting any offer. And if you do decide to refinance, good luck! Making your way through all the paperwork and documentation that is required can be exhausting, but in the end if you wind up with a significantly lower monthly payment it is worth it!

Thinking of buying or selling a home in Sussex County? Give us a call at Cooper Realty Associates and put us to work for you – 302-629-6693.

Three Ways to Build Your Credit

If you are in the market for your first home, or have struggled with your credit in the past the first step to buying your dream home is to build your credit so that you can get a mortgage and hopefully at a good rate! Here are three tips to help you:

1. Don’t have too many credit accounts. You do need to open a few lines of credit to establish your credit record, but you don’t want to have too many. One to three accounts is usually sufficient for establishing credit, but don’t open them all at once. Opening these accounts and maintaining them is key.

2. Open a variety of credit lines. Credit cards, department store cards, auto loans, bank loans, etc. are all good ways to open your credit lines. To truly build your credit you should try to have a variety of credit accounts, not just several credit cards.

3. Maintain your accounts wisely. Don’t open all of your accounts at once or you will actually lower your credit score. You also need to use your accounts. If you open them but leave them at a 0 balance, they don’t help build your credit record since it doesn’t show a lender that you have a history of responsibility in paying off your bills. To truly build your credit you need to use your accounts, but not to their limit – 30% of your credit limit is a good number to shoot for, and you also need to pay your bills on time every single month, with no exceptions.

Thinking of buying or selling a home in Sussex County? Give us a call at Cooper Real Estate Associates and put us to work for you – 302-629-6693.

Down Payment Advice

Thinking of buying or selling a home in Sussex County? Give us a call at Cooper Realty Associates and put us to work for you – 302-644-2266.

Pre-Qualification vs. Pre-Approval

Many realtors will work with you if you are pre-qualified, but it is really in your best interest as a buyer to be pre-approved before you start the house hunting process. It is heart breaking to fall in love with a home and then find out that it is way over your budget when you try to finance it. When you’re ready to start house hunting, shop around for a mortgage and find a broker that you like and trust. Once you have your pre-approval letter it shows your agent and the sellers that you are a serious buyer worth working with.

Thinking of buying of selling a home in Sussex County? Give us a call at Cooper Realty Associates and put us to work for you – 302-629-6693.

Types of Mortgages

Thinking of buying of selling a home in Sussex County? Give us a call at Cooper Realty Associates and put us to work for you – 302-644-2266.

3 Steps To Appealing Your Property Taxes

On Tuesday I talked about property taxes. And today I am going to talk about how to appeal your property taxes if you feel that they are too high. Like I said before, property taxes are based on your homes assessed value, so if you feel that the value of your home as declined or is otherwise less than what it has been assessed for you may be able to file a grievance to have your property taxes reassessed. If you think you’re in this position, here are three actions for you to take:

1. Find out if and when there is a specific time to file a grievance with the county assessor and research the steps and guidelines that apply to your home. Typically there is a specific time period each year in which grievances are accepted, so you need to find out when that is. Every area is different, so you can start by visiting your local assessor’s website to get information, figure out the requirements for your home, and download forms to start the appeal process.

2. Get research to back up the claim you are making about your home’s value. In order to appeal you will have to prove your home’s market value is lower than its assessed value. To do this, you will have to get the sale information of comparable homes in your neighborhood that have sold in the past six months. Remember, that you are not just looking at the prices of all homes that have sold, you want to find comparable homes, so you’re looking for information on homes with approximately the same number of bedrooms, bathrooms, square feet, yard space, etc. Also remember that home values vary widely from neighborhood to neighborhood, so you want to look for the comps in your specific area.

3. After you’ve done the research on your home’s fair market value, if you find the number truly is lower than your home’s assessed value you should complete the forms and submit your documentation. If the appeal doesn’t turn out in your favor, you usually have the right to appeal in person with that decision being final.

Although it does hurt when property taxes go up, just remember that this is actually good news because it means that the value of your home is also rising!

Thinking of buying or selling a home in Sussex County? Give us a call at Cooper Realty Associates and put us to work for you – 302-644-2266.

All About Property Taxes

Property taxes can be a significant portion of your monthly house payment, yet most people are painfully unaware of the ins and outs of property taxes and are happy to just be able to pay the bill each month. When you’re looking to buy a home, the property tax information is available on most real estate websites, but that information is not always accurate. Although the information listed about property taxes may have been the amount paid in the previous year, property taxes are calculated according to the value of the property. These are calculated yearly, and generally, when you buy a home the sale price is considered to be the assessed value. The issue is that there are state laws that only allow the property value to be assessed at a small increase each year, so if the home hasn’t been sold in a long time, the home may have appreciated more than the assessed value shows, in which case a buyer’s property taxes can be much higher than the current taxes. Of course, if the home has depreciated, this can mean your taxes are much lower. On top of that, there are also lots of different tax exemptions that you or the previous owner may or may not be eligible for, so if you’re eligible for a different amount of tax breaks, that’s another reason that your property taxes will end up being higher (or lower) than the previously paid amount.

To best estimate what your taxes may be ask your realtor and/or mortgage broker to help you find out what the tax rate will be in the areas you are looking at then multiply your estimated purchase price by that rate. Just keep in mind that this is only an estimate and that laws, assessment rates, and values can all change in the future.

Although it is difficult (or impossible!) to know exactly what your property taxes will be, these tips should help you be able to estimate more accurately than the tax history you find on a real estate website. Happy house hunting!

Thinking of buying or selling a home in Sussex County? Give us a call at Cooper Realty Associates and put us to work for you – 302-644-2266.

How Much Home Can You Really Afford?

When buying a home, many people end their thinking with whether or not they can afford the mortgage payment. Affording the mortgage payment is obviously a critical part of owning a home, but it is not the only part. There are many other costs that need to be factored into the monthly cost of home ownership. The two most commonly thought of our taxes and insurance. Property taxes cannot be avoided. Depending on where you live you may have multiple levels of property tax to pay (such as city AND county taxes). If you’re not sure, you can call the county property assessor’s office in your area. Finding out the final number before agreeing to the home purchase is key, because the number may vary significantly from the tax data on the real estate listing or even any estimate you’ve received. Taxes can add hundreds of dollars a month to your payment, so be sure to get the information before you close settlement.

Another big chunk of your monthly payment goes toward insurance. You can’t own your home without it. If you live in a flood danger zone, you will also have to get flood insurance which will be a second, separate policy. Combined with your mortgage payment and taxes, your monthly payment may be higher than you realize.

In addition to these costs that most people are aware of, beware the hidden costs of home ownership such as Homeowner’s Association fees, utilities, and maintenance costs. These are items you should budget for, but that not everyone thinks of. All together, your monthly home payment is way more than just the cost of the mortgage. Being prepared is about being aware of everything, so just be sure you’ve done your research and really understand what your home will cost each month before you sign on the dotted line.

Thinking of buying or selling a home in Sussex County? Give us a call at Cooper Realty Associates and put us to work for you – 302-629-6693.

Refinancing Your Mortgage

With the current low interest rates, there hasn’t been a time in recent history that’s been better for refinancing a mortgage. If you’re thinking of refinancing, consider these tips to help you.

First, determine why you want to refinance. Is your goal to lower your monthly payment by extending your loan back out to thirty years or are you looking to reduce the total amount of interest you will pay over the life of your loan? Are you looking to consolidate debt, or hoping to get in or out of an adjustable-rate mortgage? Whatever your reasons, be sure to pinpoint your goals of refinancing. It’s never a good idea to refinance just because it “seems like a great deal!” After you know why you want to refinance, figure out how many months of paying your new monthly payment it will take before you’ve covered the closing costs of refinancing. If you don’t plan to be in your house long-term, refinancing probably isn’t the right choice. Likewise, if you’ve only been in your house a short time before refinancing, that might not make sense either. One thing to keep in mind, is that even if your interest rate is significantly lower, if you extend the loan terms back out to thirty years you are paying over a longer period of time and therefore it might not save you money in interest over the long run. If you are considering refinancing, the best advice is to understand the terms of your current loan and any refinancing terms you are considering, crunch the numbers, and speak to a trusted advisor about your options. Remember, refinancing can be a great deal, but it isn’t for everyone.