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How Much Is Your Home Worth Today?

admin — Tue, 07 Sep 2010 15:40:03 +0000

What’s your home worth today? That’s a key question if you’re looking to refinance your mortgage or take out a home equity loan.

The problem is, most homeowners really don’t know.

They’re aware that their home has almost certainly lost value since the peak of the market in 2005, but just how much? Do they have enough home equity to be able to qualify for a refinance or obtain a home equity loan or line of credit?

Of course, when you apply for a refinance or home equity loan, the lender will order an appraisal to determine what the home is worth. But that costs money, of course – typically several hundred dollars – and most homeowners would like to have a good idea of whether or not they can qualify before applying for a new loan.

Estimating what your home is worth

So how can you figure out how much your home is worth without ordering a formal appraisal?

The simple fact is, you can’t – at least, not with 100 percent accuracy. Even well-qualified, professional appraisals are expected to differ by as much as 5 percent when appraising the same house – which translates to a $10,000 difference on a $200,000 home.

That said, there are ways to obtain a “ballpark” figure for your home value that can give you a better idea of whether or not it’s worth pursuing a new home loan. If your ballpark figure is reasonably close to what you need to qualify, you can decide if you want to pursue things further. If it’s completely off the mark – well, you’ve saved yourself some time, aggravation and money.

Online home value estimators

There are a number of “home value estimators” available online that allow you to plug in your home address and immediately get a free estimate of what your home is worth. Some include recent sales prices for nearby properties as well. Zillow, Chase, Yahoo, the Federal Housing Finance Agency and a number of others all offer different variations of these.

The problem is that these can produce widely varying results. Some only provide a broad range of possible values, rather than a specific price. So you really can’t be sure you’re getting an accurate estimate from any one in particular.

You can try to match up actual prices from recent sales to see which does the best job of estimating prices in your neighborhood. Just be aware that some of those sales will likely be from foreclosures, which tend to sell for considerably less than what the home might bring in an arm’s length transaction.

Contact your real estate agent

Another method is simply to contact your real estate agent who sold you the home. He or she likely has a pretty good sense of where the market stands these days and should be able to give you a pretty good estimate of what your home ought to appraise for. They’re usually willing to help, because they want you to come back to them the next time you’re shopping for a home.

On the other hand, some real estate agents may be reluctant to admit just how much value your home has lost since you bought it, and may give you an estimate that’s on the high side. In addition, many agents have gotten out of the business with the collapse of the housing market, so your agent may no longer be available.

Doing a mini-appraisal

The most accurate way to obtain an appraisal estimate is to do it like the pros do – by analyzing comparable sales. Although few homeowners have the knowledge and skills the pros do to make a full evaluation, you can come up with a reasonable estimate by comparing prices yourself.

What you want to do is look up sales information on homes that were recently sold in your community and try to identify which ones were previously sold around the same time you bought yours. You should be able to get this information through your city, town or township assessor’s office, often online.

Look for ones where the previous sales price was in the same broad range as what you paid for yours, and see how much those prices have changed. Again, look for arm’s length transactions rather than foreclosures. Try to identify about 10 of these – the average decline in values among them should give you a pretty good idea of where your home value stands.

Again, these methods will only give you a ballpark estimate of what your current home value is and may be considerably higher or lower than what a professional assessor may come up with. Be aware, too, that assessors tend to be fairly conservative in their appraisals these days, so keep that in mind as well.

But you should end up with a reasonably good idea of what your home is actually worth and whether you are a candidate for a refinance, home equity loan or line of credit.

Take Advantage of Energy Tax Credits Before it’s too Late

mortgage — Tue, 07 Sep 2010 15:36:47 +0000

If you’ve caught the home improvement bug, but have been putting it off until the economy recovers, it may be time to take action. There are many tax credits that expire at the end of 2010, so if you procrastinate, you may lose out on juicy rebates for the greening of your personal environment.

It’s easy being green

For the rest of the year, you can take deductions for certain energy improvements on your principal residence, including new windows and doors, insulation, HVAC equipment, and water heaters. You can deduct up to 30 percent of the cost, up to a maximum amount of $1,500, which would allow you up to $5,000 in total improvements. You won’t receive cash back – you can only take this deduction on your tax return. Here’s a list of eligible improvements:

Biomass stoves. These heat a home with biomass fuel. The thermal efficiency rating must be at least 75 percent, and you can include installation costs.

Central Air Conditioning. Baby, it’s been HOT outside this summer. If you’ve been longing to cool down the house, now’s the time – but you may have to replace your heating system, too. Installation costs are included.

Furnaces, Boilers, and Water Heaters. Baby, it’s COLD outside during the winter. A new furnace can keep you warmer while reducing your bills.

Insulation. These materials must be specifically designed to reduce heat loss in your home. (Insulated siding won’t qualify.)

Roofing. New panels must have pigmented coatings or cooling granules that reduce the heat gain of the home.

Windows, Doors, Skylights. Let the sunshine in and take a tax credit while enjoying improved insulation.

You can find specifics about each available option at the U.S. Department of Energy.

Financing with a HELOC

How are you going to pay for these improvements? Sure you’ll only be $5,000 out-of-pocket, but not everyone has that much money sitting around. The easiest way to finance this renovation is with a home equity line of credit (HELOC), where your bank extends a line of credit against the equity in your home. Most HELOCs have an interest-only option for the first 10 to 15 years of the loan, which means that you can pay the principal back at a comfortable pace. HELOCs are relatively easy to get, especially in amounts below $95,000. If you have future home improvement projects on your mind, make sure you get a line of credit large enough to cover them, too.

As British actor Christopher Parker said, “Procrastination is like a credit card; it’s a lot of fun until you get the bill.” Don’t delay taking advantage of this credit, or it will be gone. Once you have your HELOC for financing, you won’t have to worry about the bill. And you can spend the remaining line of credit on a whole new round of energy efficient improvements, like geothermal heat pumps, solar and wind energy systems, and fuel cells, which don’t expire until 2016.

What is HELOC?

admin — Tue, 07 Sep 2010 15:33:42 +0000

home equity line of credit (HELOC)

Know your HELOC and Handling a HELOC Freeze

admin — Tue, 07 Sep 2010 15:32:34 +0000

The mortgage crisis and subsequent tightening of credit by lenders has made tapping home equity more challenging. People who took out a home equity line of credit (HELOC) before the crisis occurred have been thanking their lucky stars that they still have access to funds, especially if they lost their jobs, had emergency medical expenses, or experienced a reduction in the value of their portfolios. Unfortunately, some banks started to freeze those credit lines, making that last lifeline unavailable to those who needed it most.

One woman, Mary Yakas, didn’t sit back when Chase Manhattan Bank suspended her HELOC. She took them to court, alleging breach of contract, and the case is still in the court system. You may not have the money and energy to tell it to the judge, but you can take the following steps to make sure that your HELOC remains intact.

Know your HELOC

A HELOC is a line of credit taken against the equity in your home. Banks will generally allow you take an adjustable-rate line of credit of up to 80 percent of your home’s outstanding equity. You generally can pay interest only on the amount you withdraw during an agreed-upon period, usually 10 to 15 years.

All terms are written into the contract. Banks can’t arbitrarily freeze your line of credit, but they do retain that option if certain conditions occur. Generally speaking, they can freeze your HELOC if:

The equity in your home is reduced by 50 percent from the time you took out your loan
You’re delinquent in your monthly payments
A significant change occurs in your financial circumstances

Actions speak, so take them

The bank must give you written notice if they freeze or reduce your credit line no later than three days after it occurs. Once you receive the notice:

1. Carefully read it for information regarding changes in your HELOC.

2. Call your lender to find out why they froze or reduced your credit line. You may have made home improvements that the bank isn’t aware of that could affect the value of your home on the upside. Or there may have been changes to your credit report that you’re not aware of.

3. Ask your lender what steps you can take to have it reinstated. Put your request in writing. Once they receive your letter, they must investigate the reasons that led to their decision, and reevaluate whether it can be reinstated.

4. Find out if there will be any fees to return your HELOC to its original terms. They may require you to get a new credit report or appraisal to back up your claim that your home value hasn’t dropped as much as they say it has. That, however, can be costly. On a positive note, your lender is not allowed to charge you a fee to reinstate your line of credit once the condition that led to their actions no longer exists.

It’s not necessary to take your lender to court, but it is necessary to call them and take the necessary steps to make sure your HELOC is there, just in case you need it.

How to Protect Yourself from HELOC Disaster

mortgage — Tue, 07 Sep 2010 15:27:25 +0000

Sometimes, something that you think is safe can turn into something quite dangerous. Like golfing, one of the safest sports known to man. Or is it? A golfer in California recently hit a routine stroke. The ball hit a rock and actually started a fire, which enflamed 25 acres and required 150 firefighters to tame it. While a home equity line of credit (HELOC) seems potentially less harmful than a golf ball, the results could also be explosive if you use it incorrectly. Here are four ways to avoid being burned by your HELOC.

A HELOC’s adjustable rate

One of the advantages of a HELOC – an adjustable rate – can quickly evolve into one of the largest disadvantages. If interest rates start rising, your monthly payments will increase along with it. In high-interest rate environments, this can happen quickly and steadily, and suddenly present you with monthly payments that are out of your comfort zone. Also, some lenders offer promotional rates for six-months to a year. If that’s the type of loan you’re considering, make sure you’re prepared for the increased payments once the promotional period ends.

The interest only trap

Another great thing about HELOCs is that each month, you’re generally able to make interest payments only. But if you don’t start paying your principal, you may be shocked by the mandatory balloon payment that’s due when your HELOC ends. Protect yourself from this bursting balloon by preparing for a mortgage refinance well in advance of your due date. Better yet, be disciplined throughout the course of your HELOC by making regular payments of principal, even though it’s not required. Work a monthly principal payment into each month’s budget, or pay your principal down from the proceeds of a work bonus or tax refund when you’re lucky enough to get one.

Hidden fees

Some lenders charge annual fees on HELOCs. Does yours? Best to find out before you enter into an agreement, or you may end up paying interest on that for the life of the loan.

Credit line freeze

If you count on your HELOC for an emergency fund, it may come as a shock if your bank decides to freeze your line of credit. This can happen if one of three events occur:

1.    The equity in your home is reduced by 50 percent from the time you took out your loan
2.    You’re delinquent in your monthly payments
3.    A significant change occurs in your financial circumstances

It’s a hassle getting it reinstated, so the best defense is a good offense. You can’t do much about numbers 1 and 3, but you certainly can make sure that number 2 never occurs.

Luckily for the golfer, no one was hurt in the fire described above. But if your HELOC goes up in flames, you could wind up with some serious financial problems and potentially lose your home.

What will your monthly mortgage payment be?

mortgage — Sun, 25 Apr 2010 15:35:10 +0000

What will your monthly mortgage loan payment be? Use this online mortgage calculator:

A house is the largest purchase most of us will ever make so it’s important to calculate what your monthly payment will be and how much you can afford. The free online mortgage calculators will show you how much your monthly payment will be. It can also show the effect of adding extra payments.

Buying or renting and how much can I save?Which is better?

This buying or renting mortgage calculator help calculate and compare.

How to prepare yourself while applying for mortgage?

admin — Wed, 24 Feb 2010 16:12:24 +0000

Posted: Fri Jan 06, 2006 9:39 pm Post subject: How to prepare yourself while applying for mortgage

As a borrower, everyone likes to get the best deal and have the loan application process completed without any delay. If you can locate an efficient lender or broker then you may not come across any problem in your transaction. But you should be able to judge the services of the lender or broker. While you can avail the services of the best lender, it is also your responsibility to make the process smooth and fast from your end. The best thing is to have a basic idea about the entire mortgage process. This will help you to avoid unnecessary delay in the loan closing. In case your loan closing is supposed to take place within 45 days or less of the rate-lock but does not occur due to delay then you may have to accept a higher interest rate. Moreover, you should provide the lender with correct information within a short time, so that the loan processing and hence closing can be completed rapidly. How much you need to save for the down payment Calculate the down payment you need to pay,get discount points, closing costs, prepaid etc. What is the future value of your Certificate Of Deposit? Using this online mortgage calculator, you will get an estimate of the future value of your Certificate Of Deposit (CD) compounded annually, daily, etc. Besides, you can also find out the annual percentage of yield on your deposit. Determine your interest savings through Refinance How much you will save in total interest and monthly payment when you refinance at a lower rate? Calculate monthly mortgage payments on fixed loan rates The Monthly Mortgage Payment Calculator will help you determine the monthly payments on mortgage for a fixed rate loan. Try to follow these simple steps to prepare yourself for the loan application process. Before you sign any legal document, go through it thoroughly. Take the help of a lawyer, housing counselor or a friend who knows how to read through the loan documents. Whenever you have any doubt, don’t hesitate to clarify with the lender. You should understand the features available with the loan program including what you should pay. Don’t just rush in to complete the application process; instead take your time, so that you don’t miss out anything. Make sure that there is no blank space left to be filled before you sign. Don’t sign the papers if you find that the agreed terms are not in accordance with your expectations. Try to maintain copies of relevant documents so that they can be produced whenever required. The application documents including your pay stub for the last 30 days, W-2s for the past two years, two recent bank account statements, two current tax returns, recent statements of you credit card accounts need to be submitted whenever asked by your lender. Try to provide additional information to your lender without delay and don’t forget to obtain the homeowners insurance once the loan has been approved. Do not hesitate to disclose your financial situation to the lender. Give him the details regarding your income, assets, debts and stability of employment. Even then, the loan process may often get delayed on account of the lender’s inefficiency. Here is where you need to shop around and find out the lender who can offer the best quotes including a comparatively low rate on your loan.

Should You Always Avoid Prepayment Penalties?

admin — Wed, 24 Feb 2010 16:08:22 +0000

Prepayment penalties, also known as cancellation fees, are one of the classic pitfalls that await the unwary borrower. All too often, a homeowner selling or refinancing their home has been stunned to discover that they first have to pay a penalty of several thousand dollars to get out of their current mortgage.

A prepayment penalty is a fee assessed for paying off part or all of your mortgage ahead of schedule. Often, borrowers aren’t even aware their mortgage has one until they trigger its provisions – although required to be disclosed by law, they often get lost in the stacks of papers that need to be signed at closing.

Fortunately, prepayment penalties are going to be a lot easier to spot on new mortgages from now on. The new Truth in Lending form, which takes effect Feb. 1, 2010, specifically requires lenders to declare whether a mortgage includes a prepayment penalty or not. Of course, that won’t do much good for unwary homeowners who already have prepayment penalties on their current mortgages and don’t realize it.

An item to be negotiated

Prepayment penalties are often portrayed as a bad thing to be avoided at all costs. In reality, they’re just one more thing to be negotiated when obtaining a mortgage. Accepting a prepayment penalty may enable you to get a lower mortgage rate or obtain a “cost-free” mortgage where you pay nothing up front and the closing costs are rolled into the loan itself. They really only become a negative when they’re sprung upon unwary borrowers by hiding them among the boilerplate of the mortgage agreement – which the new Truth in Lending form is supposed to make much harder to do.

A prepayment penalty, just like it sounds, is a penalty for paying off your mortgage ahead of schedule. Typically, the penalty is 2-4 percent of the loan balance, which can be a pretty hefty bite – 2 percent of a $200,000 loan is $4,000. If you’re looking to refinance your loan, a prepayment penalty can pretty much wipe out any savings you hoped to realize.

Banks like to require prepayment penalties to ensure they earn a minimum return off a loan – if you pay your mortgage off after one year, they don’t earn much money from it. The good news is, most prepayment penalties expire after five years – and they often shrink over time, so the penalty for paying your loan off after four years is less than it would be if you paid it off after two.

Accelerated payments can trigger penalty

Prepayment penalties can hit you in several ways. First, you could get hit by a prepayment penalty if you try to refinance your mortgage after less than five years – since refinancing means taking out a new mortgage to pay off your old one. You can also get hit if you sell your house within a few years of buying or refinancing it. A prepayment penalty can also affect you if you try to pay your loan off faster by making additional payments – although most prepayment penalties aren’t triggered unless you pay off at least 20 percent of the balance in a single year, a few may penalize you for any accelerated payments.

Accepting a loan with a prepayment penalty included may not always be a bad deal, though. If you plan to stay in the home at least five years, you may be able to get a slightly lower rate with a prepayment penalty. A “no-cost” mortgage or refinance, in which the closing costs are rolled into the loan in the form of a higher interest rate, will nearly always require a prepayment penalty, to ensure the bank earns its money back.

“Hard” vs. “soft” penalties

There are different types of prepayment penalties as well. A “soft” prepayment penalty is not imposed if you sell the home or make accelerated payments, only if you refinance into a new mortgage within the first few years. A “hard” prepayment penalty, on the other hand, is imposed regardless of the reason for paying early.

The key thing is to be sure you understand the terms of your mortgage and understand what you’re giving up and gaining in return for accepting one. If you think it’s highly unlikely you’ll refinance or pay the loan off early, you might be able to shave a bit off your interest rate by accepting a prepayment penalty. But if you may be moving or refinancing within a few years, you may be better off paying a higher rate with no potential penalty attached for paying off early.

How much you need to save for the down payment

Calculate the down payment you need to pay,get discount points, closing costs, prepaid etc.
What is the future value of your Certificate Of Deposit?

Using this online mortgage calculator, you will get an estimate of the future value of your Certificate Of Deposit (CD) compounded annually, daily, etc. Besides, you can also find out the annual percentage of yield on your deposit.
Determine your interest savings through Refinance

How much you will save in total interest and monthly payment when you refinance at a lower rate?
Calculate monthly mortgage payments on fixed loan rates

The Monthly Mortgage Payment Calculator will help you determine the monthly payments on mortgage for a fixed rate loan.

simple steps to prepare yourself for the loan application process

admin — Fri, 05 Feb 2010 04:39:38 +0000

As a borrower, everyone likes to get the best deal and have the loan application process completed without any delay. If you can locate an efficient lender or broker then you may not come across any problem in your transaction. But you should be able to judge the services of the lender or broker. While you can avail the services of the best lender, it is also your responsibility to make the process smooth and fast from your end.

The best thing is to have a basic idea about the entire mortgage process. This will help you to avoid unnecessary delay in the loan closing. In case your loan closing is supposed to take place within 45 days or less of the rate-lock but does not occur due to delay then you may have to accept a higher interest rate. Moreover, you should provide the lender with correct information within a short time, so that the loan processing and hence closing can be completed rapidly.

Try to follow these simple steps to prepare yourself for the loan application process.

Before you sign any legal document, go through it thoroughly.
Take the help of a lawyer, housing counselor or a friend who knows how to read through the loan documents.
Whenever you have any doubt, don’t hesitate to clarify with the lender.
You should understand the features available with the loan program including what you should pay.
Don’t just rush in to complete the application process; instead take your time, so that you don’t miss out anything.
Make sure that there is no blank space left to be filled before you sign.
Don’t sign the papers if you find that the agreed terms are not in accordance with your expectations.

Try to maintain copies of relevant documents so that they can be produced whenever required. The application documents including your pay stub for the last 30 days, W-2s for the past two years, two recent bank account statements, two current tax returns, recent statements of you credit card accounts need to be submitted whenever asked by your lender. Try to provide additional information to your lender without delay and don’t forget to obtain the homeowners insurance once the loan has been approved.

Do not hesitate to disclose your financial situation to the lender. Give him the details regarding your income, assets, debts and stability of employment. Even then, the loan process may often get delayed on account of the lender’s inefficiency. Here is where you need to shop around and find out the lender who can offer the best quotes including a comparatively low rate on your loan.

Mortgage Amortization

admin — Sat, 23 May 2009 13:52:22 +0000

Mortgage amortization is essentially a loan repayment plan or schedule. It facilitates the removal of the debt burden of the borrower over a certain fixed period of time by making monthly/periodic payments. The payments made through regular, periodic installments comprise of the monthly interest (including accrued interest on the outstanding debt) and a chunk of the principal balance i.e. a portion reducing the outstanding amount of the actual debt. The amount of monthly (periodic) payments remains the same over the life of the loan.

In the early stages of the period (life) of the loan the actual repayment towards principal will turn out to be very small while that towards interest payment will be very big. In the later stages, however, this case will be reversed.

Amortization involves the ‘term’ of the mortgage or ’spread’ of the repayment schedules over a period of time. A mortgage can well be the longest loan to be taken, meaning, it spreads over the longest period in the process of getting repaid. Mortgages could even elongate to 15, 20, 25 or 30 years. Normally, the shorter the term involved in amortization the lesser the interest one has to pay back. So, amortizing one’s mortgage over a lower term might seem plausible. However, it must be remembered that the monthly installments to be paid in case of mortgages amortizing over a shorter period also need to suit one’s financial position and earnings/incomes.

Car loans and home loans well conform to the amortization norms because each of them has a fixed payment schedule remaining the same for the life of the loan. Credit card payments, on the other hand, involve a revolving loan and have no definite lifetime or payoff date and change on monthly basis.