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Tom's Blog

Top 10 Homeowner Financing Tips

January 24, 2012 7:10 pm

Here are 10 great tips to consider when getting a mortgage.

1. Don’t Stretch Your Loan Qualification Limits to Buy a Home Beyond Your Budget. A home should be a source of satisfaction and an investment not a financial albatross, especially for first-time buyers. Borrowing heavily from family members, selling assets, and living poor just to own a bigger or better home, makes for larger mortgage payments and risks difficulties in the future.

2. Always Shop for Competitive Rates, Points, and Fees.
Get at least three bids. The most competitive lender one week may not be next week so get (or reconfirm) quotes the same week you are ready to make the commitment.

3. Get An Immediate Written Confirmation of Your Locked-in Interest Rate and Interest Rate Terms. You might find some discrepancies with the figures used on the final loan documents.

4. Don’t Agree to Prepayment Penalties. You may want to refinance or partially prepay part of the mortgage. If there is no mention of prepayment penalties, make sure you have an addendum attached to the mortgage specifying that no fees will be imposed.

5. Understanding All the Conditions of Your Loan:
You or a professional that you trust should thoroughly scrutinize each document. Ask questions if you aren’t sure what something means.

6. Pick the Right Kind of Loan. Rates are higher on 30 year loans than on comparable 15 year loans. That's because there is a greater risk that rates will go up the longer the lender commits to a fixed rate. Lenders hate holding loans at below market rates. While there is an advantage to the predictability of fixed rates, if you expect to be transferred in 5 years, you’ll be paying more than you need for a 30 year fixed rate loan. If you want both the security of predictable payments and the lowest monthly payment consider "hybrid" loans - those with a fixed rate for the first five or seven years of their 30 year duration. If you are going to be there for a shorter period, or have confidence that rates will be dropping further, consider an adjustable rate mortgage.

7. If You Are Buying Rather Than Refinancing, Consider Getting a Pre-approved Mortgage or Contingent Loan Approval Letter.
The former is a binding commitment for a loan up to a certain amount. It can substantially strengthen your negotiating position with the seller, but it puts pressure on you to close a deal before the loan commitment expires. A contingent approval is a letter from a lender that states the largest loan you would qualify for, subject to confirmation of the financial information you’ve provided and formal approval. It will also give you additional negotiating leverage without binding you to the lender (or vice versa). Sometimes owner financing can work to both parties advantage. Ask the seller if it’s a possibility. If so explore further to see if there might be mutually agreeable terms before making an offer.

8. Save Everything. Lenders require and provide numerous documents. Some get misplaced, usually at the most critical time. Keep copies of everything you send the lender and everything the lender sends you.

9. Take Advantage of the Deduction. The mortgage interest deduction is one of the few remaining tax deductible interest payments, and it’s also the cheapest form of long term financing. Consider financing/refinancing as an alternative source of funds for home improvements or other constructive long term investments like education. Don’t get in over your head, and never use it to finance your summer vacation or other short term pleasures.

10. Study! A lot of money is at stake. You can’t learn too much, and you won’t have time to learn what you need, interview and select a lender in the five days allowed most buyers to apply for a loan. Read the real estate section of your local paper and books on the subject.

Courtesy of the American Homeowners Foundation and the American Homeowners Grassroots Alliance, www.AmericanHomeowners

Word of the Day

January 24, 2012 7:10 pm

Trust deed. A document used in place of a mortgage in certain states; a third-party trustee, not the lender, holds the title to the property until the loan is paid out or defaulted. Also called a deed of trust.

Question of the Day

January 24, 2012 7:10 pm

Q: What is a variance?

A: It is a request made to your local jurisdiction to deviate from current zoning requirements. If granted, a variance will allow you to use your land in a way that is normally not permitted by the zoning ordinance.

However, do not view a variance as something that changes the zoning law because it does not. Rather it waives a certain requirement of the zoning ordinance. For example, it may allow the owner of an odd-shaped lot to reduce slightly the setback requirements in order to accommodate a building, or permit the building of a gazebo in the back yard.

Short Sales: A Viable Alternative to Foreclosure

January 23, 2012 7:08 pm

One of the things we hope to see less of in 2012 is short sales.

This brings me to a blog by Bion Grady, ( who specializes in loan modification assistance and short sales in Paulding County, Ga. Grady says if the only alternative for distressed homeowners is to walk away from their property, a short sale may still be a viable alternative for a number of reasons .

Grady advises homeowners to remember these four things:

1. Debt Eraser. The upside down debt is erased in most cases. If you are selling because of a financial hardship, then the upside down debt will be automatically erased in most cases. If your loan is owned or insured by Fannie Mae, Freddie Mac, FHA, and/or VA, and you are short selling because of a financial hardship, their policies state that your debt will be erased.

2. Faster Rebound. You are eligible to buy another home much sooner compared to a foreclosure. The most common loan program, Fannie Mae, stipulates that you can buy another home under their program in two years. FHA, a popular low down payment loan program stipulates that you can qualify for an FHA loan within three years.

3. No Cost to You. According to Grady, all of the expenses are paid for by your lender. That includes the title insurance, any county taxes or fees on the sale, attorney fees, and the real estate agent. If the lender foreclosed on the house and then tried to sell it, they would have to pay all the costs.

4. Less Credit Damage. Upon completion of the short sale, Grady says your credit score will drop between 50 and 100 points. However, it will rebound fairly quickly, and you will have a lower debt to income ratio, which will boost your credit. In addition, anything and everything bad on your credit can be fixed through the dispute process.

Can Your Parents Disinherit You?

January 23, 2012 7:08 pm

Disinheritance. It's sometimes wielded as a joke, and sometimes said in complete seriousness. But can you legally be disinherited?

Outside of Louisiana, you have no legal right to inherit from your parents. However, you do have a right not to be accidentally disinherited.

What does this mean?

For starters, you can be disinherited. If a parent updates his or her will and includes a disinheritance clause, you will not receive an inheritance.

That is, unless you can prove that the will is invalid. Or that someone forced your parent to disinherit you.
But what happens when you're simply not mentioned in the will. Have you been disinherited?

If your parent updates his will after your birth and does not mention you, this presents challenges.

Remember, you have a right not to be accidentally disinherited. In some states, this situation implies an intention to disinherit. In others, you are disinherited if the majority of the money is left to your surviving parent.

You're also disinherited if the deceased parent gave you a very large sum of money while he or she was still alive.

Now, if a parent's will was written before your birth, this is a more favorable situation. Omitted child statutes presume that you were accidentally left out. You'll most likely get to inherit.

It’s a difficult conversation, but one worth having. With these facts about disinheritance in mind, it might be time to talk about estate planning with your parents.


Top 10 Furniture Trends of 2012

January 23, 2012 7:08 pm

Just like clothing trends, furniture fashion will change over 2012. With a brand new year in full swing, many factors are quietly reshaping our spaces and our priorities at home. Keep an eye out for following trends, offered by Ashley’s Home Furniture, in the next 12 months.

"Decisions about how and where to live have never been more critical," says Kris Woodcock, VP of Merchandising. "With older consumers wanting to stay put as long as possible, graduating children returning home after college and adult children inviting their parents to live with them, our houses are requiring smarter choices, better use of space and more long-term planning rather than resale considerations."

1. Sectionals. Thanks to family rooms, more entertaining at home and fashion-forward, younger shoppers, sectionals are going to be big. Durable, high performance fabrics and leathers make sectionals appealing in 2012, along with versatile pieces, such as a chaise ottoman that can flip to either end.
2. Storage Beds. They're not just for kids' rooms anymore. Bedroom furniture pieces with storage are entering master bedroom suites in a big way, with sleek designs inspired by elegant platform beds. For 2012, many of them will include enough storage to reduce the need for both a chest and dresser, or add much-needed extra storage for shoes, off-season clothing, linens and more.
3. Better Mattress. Ever since hotels began replacing their mattresses with more heavenly versions, consumers have been upgrading their own homes with better mattresses and pillows. For 2012, look for a move away from plush pillow-tops to streamlined, flatter beds.
4. Console Seating. Once a luxury product in need of a designated home theater room, theater seating today is going anywhere there's a big-screen TV. And the console loveseat is the rising star. Perfect for small spaces and budgets, it's as fully loaded as home theater sofas and sectionals, including cup holders, storage console, plush arms, head-rest and chaise-style ottomans, multiple comfort positions and power.
5. TV Consoles. They're cheaper, bigger and better, and flat-screen TVs are making their way into every room in the house. In 2012, the vast majority of those TVs will be housed in or on furniture rather than hung on the wall. Look for better-designed, better-quality TV stands (that look like real furniture), along with clever places to store components—and taller, multi-purpose versions that double as a drawer chest.
6. Servers. The growing trend to hosting buffets rather than sit-down dinners explains the growing popularity of servers and sideboards. Easy access to cords for warming trays and blenders, less fancy china to display (younger consumers are opting out of rarely-used dinnerware) and smaller homes all add to their popularity. For 2012, look for servers with as many drawers as doors, integrated power bars or moisture-resistant tops.
7. Writing Desks. Laptop computers and wireless networks are changing our concept of a home office. A single "official" work area is being joined, or replaced, by multiple workstations that can go anywhere. For 2012, it's all about compact workstations, with a simple table in a bedroom, hallway or behind the sofa. Look for warmer styles that blend with other furniture pieces.
8. Bigger Coffee Tables. Many people opt to eat dinner on the sofa rather than at the kitchen table, explaining the trend to bigger and better coffee tables.. For 2012, look for pop-up coffee tables for eating or working in front of the TV, storage drawers or shelves and deeper sizes scaled for sectionals.
9. Gathering Tables. The kitchen may be the emotional and physical center of the home, but it's the eating area that's becoming the hub; especially when designed to be a comfortable, live-in gathering place. Higher-height gathering tables or pub tables are the perfect choice, able to house a crowd, double as a workstation or extra cooking surface, or act as space divider between the kitchen and living room (with enough height to see over the sofa to the TV). For 2012, look for unique, transitional styles that bridge more stylish kitchens and less formal living areas.
10. Accent Furniture. Unique, stand-alone accent furniture will add storage, flexibility, and plenty of character in 2012—satiating our appetite for something fresh, new or daring when budgets don't allow a full room makeover. Accent chairs, small tables, ottomans, shelves, drawer chests and screens will bring designer-style décor home, with a range of exotic or antiqued finishes, reclaimed woods or hand-painted pieces that look acquired from an antique store or exotic trip.


When New Years Resolutions and Football Parties Collide

January 23, 2012 7:08 pm

Football season is upon us. And as the Super Bowl approaches, your diet may be taking the back-seat on game days. However, this doesn’t need to be the case.

An estimated 40 percent of Americans make new years resolutions—weight loss and exercise being among the top improvement goals. Of those, over 45 percent will have given up by the end of January. On the flip side, over 100 million people will watch NFL's championship game; many in a party setting with specially prepared food spreads. After all, the food that is served is as important to the party as the commercials are to the game. For dieters, the temptation to “cheat” will be great.

Here are a few tips for a healthier football function:

Go with Guac- Full of good-for-you fats, guacamole is a much better choice than a cheese or sour cream based dip, which are high in cholesterol.

Skip the Chips-  Serve sliced veggies alongside your dips instead of chips or crackers. This will add filling fiber, slash calories and help you get your recommended servings. If you do offer chips, make them whole grain!

Build Your Own- Offering build your own taco or sandwich bar allows guests to choose their own healthier options.


Word of the Day

January 23, 2012 7:08 pm

Townhouse. Usually a two- or three-story dwelling with shared walls, or a living unit operating under the condominium or townhouse form of ownership.

Question of the Day

January 23, 2012 7:08 pm

Q : Is it possible to save on closing costs?

A: Certainly, once you get pass the sticker shock. Closing costs are expensive. They can average between 2 to 3 percent of the total home purchase price. But here are a few ways to save:
• Haggle with the seller. He may pay all or part of the closing costs.
• Nab a no-point loan. You may have to pay a higher interest rate, but if you are strapped for cash and can qualify for a higher interest rate, you may find this type of loan can significantly reduce your closing costs.
• Grab a no-fee loan. Although the fee is usually wrapped into a higher rate loan, it does offer one advantage – you get to save on the amount of cash you would need up-front.
• Secure seller financing. These loans typically avoid the traditional fees or charges imposed by lenders.
• Shop ‘til you drop for the best deal. Every lender has its own unique fee structure; you are bound to find one that works for you.

Icy Road Woes? Tips for Winter Driving

January 20, 2012 6:58 pm

With winter weather a bit on the unpredictable side, icy roads can come at any time. The following tips, offered by specialists at Fremont Insurance, will help you arrive at your destination safely.

1. Start Clean –
Be sure to completely clear snow and ice from all windows, lights, hood and roof for maximum visibility and to avoid having ice and snow fly off your vehicle. Law enforcement officials are on the lookout for "peephole drivers."
2. Light It Up – Before starting out, turn on your lights to increase your visibility to other motorists.
3. Slow Down – Remember, posted speed limits are for dry pavement. Decrease speed on icy, snow-covered roads and allow extra distance between you and other vehicles.
4. Look Ahead – Watch the traffic well ahead for extra reaction time. Always drive defensively and give yourself a cushion of time to deal with wintery conditions.
5. Stay Away – Stay well back of maintenance vehicles and snowplows - at least 200 feet (it's the law) - and don't pass on the right. Use extreme caution when passing in a passing lane.
6. Pick a Lane – Avoid abrupt lane changes. There may be a snow ridge between lanes. Also, the passing lane may be in worse shape than the driving lane.
7. Take a Brake – Brake early and gently to avoid skidding. It takes more time and distance to stop in adverse conditions. If your wheels start to lock up, ease off the brake. Do not pump anti-lock brakes. The right way is to stomp and steer.
8. Watch for Signs – Watch for signs alerting you to slippery bridge decks and other areas prone to becoming slick, even when the rest of the pavement is in good condition.
9. Stay in Control – Don't use cruise control or overdrive in wintery conditions. Even a slight depression of your brakes to deactivate can cause loss of control on hidden slippery patches
10. Avoid Assumptions – Do not assume your vehicle can handle all conditions. Even four-wheel and front-wheel drive vehicles encounter trouble on winter roads. The false sense of security these vehicles offer can leave you less prepared to deal with emergency situations.


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