Friday, August 21, 2015

Best & Worst Home Improvements for ROI

If you’re an HGTV home remodeling shows addict like I am, you’ll agree that most home renovations are an added value. However unless you’re planning on keeping your home forever, that’s simply not the case.  In fact most renovations these days are mostly done to increase home value because of the booming real estate market. Considering all the time and hard work that goes into these upgrades, you would expect the value of your home to increase, but that’s not always the case.

I’ve read many articles on this subject, and the consensus seems to be that you’re more likely to recoup more of your investment with basic home maintenance than you are with big budget additions. But before you abandon HGTV and nix all your home remodeling plans, there are some bigger budget additions that are well worth it. This depends on factors such as the age and condition of the entire home, the location, and the type of addition you’re making.   

After doing some research, and speaking to some real estate agents, below are the 5 best and 5 worst home renovations you can make if ROI is a concern.

Top 5 Best Home Improvements

  • Attic Bedroom - converting an unused attic into an extra room which can be used as a bedroom, craft room, or an office has shown to have a high return on investment.
  • Hard Wood Floors - if you have wall to wall carpeting you should really look into installing hard wood floors. If you already have them under the carpeting, have them refinished.
  • Wood Deck Addition - there's really no need to explain this one. Who wouldn't want a deck for in their new home for grilling and entertaining during the warm weather?
  • Minor Kitchen Remodeling - Upgrade appliances for high efficiency, reface cabinet doors and replace laminate counters.
  • Exterior Siding & Roofing Replacement - For potential buyers, knowing that they will not have to make those expensive upgrades anytime soon is a huge selling point.

Top 5 Worst Home Improvements
  • Swimming Pool or Hot Tub - These aren't attractive features to everyone. In fact for most people they are viewed as energy guzzlers.
  • Garage Addition - If it's not already there, don't have it built. This addition doesn't not have a high ROI.
  • New Windows - Installing new windows can be quite expensive. If they are operational, and just need caulk around the cracks, storm windows or weatherstripping, they can still be energy efficient and cost you a lot less to repair.
  • Wallpaper, Paint Fixtures & Ornate Chandeliers - Each buyer has their own taste, keep it simple.
  • Home Office Remodel - If you have an extra room, don't spend the money to turn it into a home office if you're selling your home. For obvious reason the ROI on that can be quite low, the buyer may choose to turn that home office into another bedroom or a craft room.
I'm sure some of you will disagree with me on this list, this is only meant for home owners who are looking to sell. If you're interested in making upgrades to your homes without selling it, you may want to look into a cash out refinance to cover the costs.

Wednesday, August 12, 2015

Is an Adjustable Rate Mortgage for you?

I, just like many of you, never understood why any borrower would want to choose an ARM (Adjustable Rate Mortgage) over a Fixed Rate one. Not only does it seem like a safer bet to go with a 30 year fixed rate mortgage than a 5 or 7 year arm, but a lot of people claim it is one of the reasons for the most recent housing crisis. However last week my opinion completely changed after hearing Matt Ishbia, the CEO of UWM describe it in laymen terms. 

In no way am I saying that a borrower should choose an ARM over a 30 year fixed rate mortgage. What I am saying is that each of these options have their advantages, and depending on your situation an ARM may be the better choice for a mortgage loan.

So who would benefit from an Adjustable Rate Mortgage?

  • Some first time home buyers. For instance, a couple who plan on starting a family in a few years. A smaller home would make more sense to start out with, but they can choose to refinance or purchase a different home before the end of the fixed rate period, once they start expanding their family.

  • Borrowers who don’t plan on residing at the same home for a long period of time, or ones getting ready to retire. If retirement plans are in your near future, and you’re trying to decide on whether you’re going to downsize afterwards, relocate, having a low monthly payment for that fixed term can give you time to decide.

  • The lower monthly payment you receive with an ARM can free up money for other purchases or investments. It can also qualify you for a larger home, that you may not have been able to afford otherwise.

Let me be clear though, the guidelines on this product are set for borrowers with excellent credit. If you would like to compare what your payments would be with an ARM compared to a Fixed Rate Mortgage you can use this calculator.

You can find more detailed information on our website for ARMs.

Wednesday, August 5, 2015

So you're ready to buy your first home, now what?

Buying your fist home is exciting and somewhat overwhelming (yes that’s normal). Many first time home buyers will make the common mistake of house shopping first, which may result in their dream becoming a nightmare. Here are the steps you should take to make your home buying process as seamless as possible.

Figure out your budget.

Most lenders will say that you should spend no more than 25% to 28% of your monthly income on your mortgage payment. To help you figure out the maximum price you can afford on a home, provides a good online calculator

Check your credit score.

You should have a general idea of what your credit score is, and make sure everything is accurate on your credit report before talking to a Mortgage Broker or Bank. Although lenders can help you with this process, you should at least have a general idea.

Prepare your financial documents.

You should have the following documents ready before talking to your lender about a home loan. Although most loans require these documents, some niche loans may not require everything listed.
  • If you collect a paycheck, a W-2 for the past two years.
  • If you're self-employed, your 1099 or Profit & Loss statements.
  • Two years tax returns (most recent), your lender may ask for only the most recent one.
  • Recent paycheck stubs.
  • List of assets including statements. This includes all bank statements, mutual fund & brokerage statements, automobile & real estate license, and all other investments or assets.
  • A list of all your debts and the most recent statements. All credit cards, car & student loans, and other loans you make a monthly payment on.
  • Your canceled checks for rent or current home mortgage payments.

Schedule an appointment with a mortgage professional. 

There’s a never-ending debate on whether you should go to your bank for your home loan, or a mortgage broker. I say shop around and figure out your options. While some buyers feel safer going to their bank for a home loan, because a mortgage broker works with more than one lender they can shop around for you. They also have access to loan options that big banks do not offer, they are labeled on our website as Special Loan Programs (niche loans). Our mortgage professionals will prepare a pre-qualification letter and go over all cost details with you, which include but are not limited to:

Interest Rate
Lender Fees
Appraisal Fees
Underwriting Fees
Processing Fees
Closing Costs
Real Estate Taxes
Home Insurance

Find a Real Estate Agent.

You may have one already in mind, or have a recommendation from family or friends. If not we will be happy to recommend a high-quality Realtor for you. 

Find the perfect home.  

You should have a list of what you are looking for in a home and discuss it with your realtor, including must-have features and optional ones. Once you find the right home, and your offer is accepted, we will begin the loan process and keep you updated throughout the process. Our goal is to have you close on your new home within 30 days, however some niche loans may take an extra week or two because of underwriting.

Are you ready to speak with one of our mortgage professionals?

Monday, August 3, 2015

Interest Only Loan

We now offer an Interest Only loan, a low and flexible payment option. Unlike a traditional mortgage where a borrower’s monthly payment goes towards the principal and interest, the monthly payment on this loan goes all towards interest for a fixed term, which is why it’s significantly lower. While this may sound like an attractive choice, not every borrower is a good candidate for this loan.  Here are a few things you should know if you’re considering an interest only loan.
  • They are usually geared towards borrowers who can afford a 30-year fixed mortgage payment, but would rather have the lower interest only payment to invest the difference elsewhere.
  • During the interest only period, the whole amount of the monthly payment qualifies as tax deductible.
  • Is more ideal for home buyers who do not intend to remain in the home for very long.
  • Good choice for a fixer upper or an investment property.
  • Works well for a borrower who doesn’t make a steady salary, instead relies on commission  or bonuses.
  • Deferred principal for the interest only loan we offer is only 10 years.

 Guidelines and online application for the Interest Only Loan.