Friday, July 6, 2018

What You Need to Know About PMI

Are you looking at buying a home and putting less than 20% down? Your loan will require you to purchase private mortgage insurance, or PMI.

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What is PMI?

PMI is private mortgage insurance. It is essentially an insurance policy that protects the lender from you not being able to pay your loan. PMI is a monthly fee rolled into your mortgage payment and is required for all conventional loans that have down payments less than 20%.

For conventional loans, once you have built up equity of 20% in your home, you can cancel your PMI and remove the expense from your monthly payment. With FHA loans, however, PMI costs stay with the loan for its duration. Once they have reached the 20% equity level,many people change their FHA loan to a more conventional loan. As the buyer, you pay a monthly premium and the lender is the beneficiary.

PMI costs vary based on your loan-to-value ratio, the amount you owe on your mortgage compared to its value, and your credit score. The better your credit score, the better the rate you are going to get on your private mortgage insurance. You can expect to pay between $30 to $70 per month for every $100,000 you borrow.

People purchase private mortgage insurance because, even though it is an extra cost, it enables them to buy a home much sooner.

If your credit score was 800, you could expect to pay $68 a month on a $200,000 loan. If your credit score was 625, meanwhile, you’d pay $268 per month for your private mortgage insurance.

The average down payment last year, according to the National Association of Realtors, was about 10%. For first-time homebuyers, the average down payment was 5%. This means that a lot of people are paying private mortgage insurance.

Why though? While it is an extra cost, it enables you to buy a home much sooner. If homes are appreciating at a certain rate, the sooner you can buy, the better off you are. This helps compensate for the sting of private mortgage insurance.

If you have any additional questions or are interested in buying or selling, please feel free to contact me. I look forward to speaking with you soon.

Wednesday, May 23, 2018

How Do Reverse Mortgages Work?

Do you know how reverse mortgages benefit senior citizens? If not, let Ron Smith of Opes Advisors explain.

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What are reverse mortgages? How do they work? To help explain, I have with me Ron Smith, a reverse mortgage expert from Opes Advisors.

I understand that reverse mortgages once had a bad reputation, but that is no longer the case.

It is true that there was a time when, for reverse mortgages, the bank went on title with you, and that is no longer happening. Now, they are simply a loan or lien against your property like a regular mortgage. That way, when you pass away or move out of the house, your heirs get the property just like normal; the bank doesn’t take it over.

There was also once a concern about, say, if one of the borrowers was less than 62 (the minimum age to be eligible for a reverse mortgage) and the older spouse who had the mortgage passed away, what would happen to the spouse? That issue has also been taken care of. Now the spouse can just stay in that house.

Can you clarify what a reverse mortgage actually is?

Typically they are used when somebody has a fixed income, like Social Security or a pension, and they just do not have enough money to make it through the month. We do a loan on the house, at which point, they can either get an income stream, a lump sum of cash, or a line of credit; then they can just take what they need when they need it. As time goes by, they just use those funds to help them pay their bills and live their life. Medical reasons are the one of the primary motivators for reverse mortgages. There is no payment required, although you are welcome to make a payment if you would like. Once you move out of the house, it goes to your estate, allowing your heirs to either pay it off or sell it.

Reverse mortgages are used when somebody has a fixed income, like Social Security or a pension, and they just don’t have enough money to make it through the month.

You said that you don’t have to pay it back if you wish—obviously, it will come due at some point, so how does that work?

Once you no longer live in your house, your heirs can sell the house to pay off the loan, or pay it off themselves without selling it. Whatever money is left goes to the estate.

It sounds like a good plan to help senior citizens stay in their homes for a longer time if they lack a good pension plan.

It absolutely is. For example, we are doing one for a lady whose husband passed away. She receives $1,000 a month from Social Security, but her house payment is $796 a month. Through the reverse mortgage, she won’t be getting a lot of money, but we’re going to make that payment go away.

How can people get in touch with you to learn more about reverse mortgages?

They can call me directly at (541) 284-8036. I would be happy to answer any questions for them.

I would like to thank Ron for coming and speaking with me. If you have any real estate questions for me, please feel free to reach out to me. I hope to speak with you soon!

Thursday, May 10, 2018

10 Questions to Ask a Potential Agent

Choosing a real estate agent that fits your needs is crucial to the success of your home selling. Today I have a list of the 10 things you should be asking.

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If you are one of the many people thinking about selling your home, there are some things that you should know when considering a real estate agent. You probably already know that you need a good agent. But how do you find that good agent? I made a list for you of the 10 questions you may want to ask when hiring an agent so that you know what to look for.

First of all, you should interview at least three agents. You want to get a good feel for the one that is perfect for you. The following questions are a good way to find out if they are a good fit.

1. What makes you different from the others? Do they have a unique marketing plan or program in place that the other companies don’t?
2. What is the company’s track record and reputation. Ask how many homes the agent has sold in the last year. That is really more important than the company that you go with.
3. What is your marketing plan? What will the Realtor plan to do to help sell and get you top dollar for your home quickly?
4. How many homes have you sold in the last year? That is going to give you a good idea of the productivity of this Realtor. Also, make sure that they are familiar with the neighborhood you are living in.

Make sure that they are real familiar with the neighborhood you are living in.

5. Who takes control of advertising? Do you have control over your own marketing? This could make a big difference because if they own their own marketing they can advertise as much as they want to for your home.
6. What is the difference between the listing price and the sale price? Many times, it is close. That is going to tell you that they list the home correctly.
7. How long does it take you to sell a home? This is a big deal because if it takes a long time, the agent is probably not marketing as strongly as maybe they should be.
8. How many buyers are they working with at the moment? This doesn’t mean that the agent is going to sell to their buyers, but it does give you an idea how many people they can share that information with.
9. Do they have a reference list or a testimonial list that they can share with you? You may want to hear from people that have worked with them before to find out the positives and negatives.
10. What happens if you aren’t happy? Are you allowed to cancel your listing if you are not happy with the agent’s work?

If you would like to know more about what to ask when interviewing a potential real estate agent or are interested in selling your home with me, please don’t hesitate to contact me. I look forward to speaking with you soon.