Tips for Understanding Your Local Housing Market

Tips for Understanding Your Local Housing Market

Buying or selling a home in your local housing market takes research, but how do you understand your local housing market? Here are some tips to help you out.

Your local housing market is often quite different than the nationwide averages and trends. Local markets do not always follow the trends and when sales are good nationwide, that could mean sales are mediocre in your area. On the flip side, when sales are bad across the nation, sales in your local housing market could be going very well. That is why it is so important to know how to understand your local housing market if you plan on selling your home or buying another one in the area in the near future. Here are some tips on how to understand your local housing market so you can make informed decisions when buying a selling.

Define the Phrase \"Local Market\"
Before understanding the housing market in your area, you have to define your \"local market.\" The best way to do this is to choose the smallest unit of area for which you can find information. Some local housing markets only consist of a neighborhood which may include three or four blocks. In more suburban areas, a local housing market may consist of a single housing development. In a rural market, the local market may be considered the entire county.

Once you have determined what the local housing market is going to be, take some notes about the geographic and political boundaries in that area. Are the houses and properties on one side of the street larger than on the other side? Are commercial buildings mixed in with the local area or is there a clear boundary between the businesses and the residential homes? These and other observations can help you break down your local housing market into an even smaller unit so you can understand it better.

Begin Your Research
These days, it is so easy to go online and research various neighborhoods across the country. Thousands of websites exist where you can find prices of mortgages in various areas, safety statistics, school information and pretty much anything else you want to know about local housing markets. You can even go to Google and find actual maps and pictures of the neighborhoods when doing your research. You can also compare mortgage rates and other fees and charges with various companies from the comfort of your own home. There are so many things you can do before you even step out of your house.

Should You Get an Interest-Only Mortgage Loan?

Should You Get an Interest-Only Mortgage Loan?

There are many types of mortgages to choose from. Which one is best for you? Here is some information you should know before you choose an interest-only mortgage.

There are many types of mortgages out there for homebuyers to choose from. Some of them are better than others and there are some that are just a complete disaster from the beginning. Unfortunately, because some buyers do not educate themselves on the types of mortgages or because they have bad credit, they take a less than desirable mortgage and often get into more trouble than they were already in.

An interest-only mortgage is one of those types of mortgages that may sound like a good idea for buyers with bad credit and little money, but there are some disadvantages to these types of mortgages, too. Interest-only mortgages are typically set for a term of either five or ten years or somewhere in between. The name says it all – you are only making payments on the interest charges of the mortgage loan. Once this term expires, the lender recalculates your payments which includes any interest that has not been paid along with the principal. This almost always results in much higher mortgage payments that many buyers cannot afford. As a result, the buyer is either forced to find a way to make those larger payments, refinance the loan or give in to foreclosure.

If a borrower is disciplined with their money, an interest-only mortgage loan may be ideal for them. If they choose to invest the money they are saving each month while only paying on the interest, they can get that extra money to work for them earning a high interest rate. In a nutshell, these borrowers can borrow more money in the short term and pay less while investing their savings for other reasons, whether it is to grow their business, finish college with a higher degree or simply to let it sit in an interest-bearing account. When the mortgage is recalculated after the interest-only term is up, the borrower may have more money than they would have if they had just made the normal mortgage payments.

Interest-only mortgage loans may also benefit some buyers with tax advantages. The money you pay on the interest of your mortgage loan is usually tax deductible, which means that the borrower may be able to deduct 100 percent of their payments on their taxes during the term of the interest-only loan. It is always best to consult with a qualified financial consultant, however, before doing this on your own.

Before signing up for an interest-only loan, weight the advantages and disadvantages. You may be a financial guru and think about the tax benefits of these types of loans, but is it worth the risk? Are you even disciplined enough to put the extra savings toward something useful or in an interest-bearing account or would you be more likely to spend it each month? Weigh the options and be realistic about your financial discipline before agreeing to an interest-only mortgage loan.

Five Reasons to Refinance Your Mortgage

Five Reasons to Refinance Your Mortgage

Making the decision to refinance is never easy, but here are some of the advantages to refinancing your mortgage loan to help you make your decision.

Refinancing your home often has many advantages. You can take advantage of lower mortgage rates, pay less on your overall loan and put more money back into your pocket each month. Here are five awesome reasons why you should refinance now.

Lower Monthly Payments
Unless you plan on moving to a new home sometime soon, refinancing your mortgage loan can lower your monthly payments. Chances are that you are in a better financial situation now than you were when you bought the house unless you have had financial difficulties recently. If you have been able to pay your bills on time and have not had any major financial catastrophe, you can often get a better rate which leads to lower payments. You will pay some upfront costs for the refinancing, but you will soon recover those costs if you stay in the home for a few more years.

Switching between Mortgages
If you signed up for an adjustable-rate mortgage or some other type of mortgage besides a fixed-rate, refinancing your loan will give you the opportunity to switch. Adjustable-rate mortgages are always uncertain because you never know how much you will pay from month to month because the interest rate is always fluctuating. Other types of mortgages are also less than ideal. If you have anything but a fixed-rate mortgage, consider switching to one once you do your refinance.

Get Rid of Your PMI
Private Mortgage Insurance, or PMI, allows you to purchase a home if you are unable to put at least 20 percent down. This insurance helps ensure the lender will get their money if you default. However, when you refinance, you can get rid of this extra payment as you pay down your mortgage. Check with your lender to see if you are eligible to go without PMI before you stop paying it.

Tapping Into Your Home’s Equity
If you have been paying on your home for several years, chances are that you may have some equity built up in it. When you refinance at lower mortgage rates, you can tap into that equity and use some of it for home improvements, paying down debt or taking that much needed vacation you have been putting off for years. In some cases, the money you receive after refinancing can even be tax deductible!

Get Out of a Balloon Payment
Balloon payments often sound like a good idea at the beginning of a mortgage, but they can be disastrous later on. At the end of the loan term, you will be responsible for paying the entire balance of the loan or risk losing your home. Instead, choose to refinance and get into a fixed-rate mortgage so you can pay the same payment every month until your home is paid off.