mortgage – 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.

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.

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.

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.

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

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.

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.