To Sell or Refinance in a Sluggish Market
Homeowners and sellers are seeking solutions with the current crisis we’re all facing. In fact, the Mortgage Banker’s Association reports a 6% increase in home loan applications and who can blame them with the lower interest rates. If you are facing rocky roads ahead, you may be one of many looking into refinancing. However, there are some alternatives requesting your attention. Information is key to make the best decision. If you’re shaking your head, this article may be worth the 3-minute read. Here is the least you should know about refinancing versus selling.
Refinancing may be your best solution. The FEDS are predicting a steady incline with the present rates hanging at 3.2%. If you’re a homeowner who is struggling to make payments or paying two mortgages, refinancing your current loan may make the most sense. However, you want to be fully aware of the ins and outs for changing the status. Speaking with a loan officer will help you decide.
Refinancing in a Sluggish Market
Top lenders are becoming less lenient with approval and qualification for at-risk credit. If you are currently employed and hold a worthy credit score, you can shop the best offers. In some situations, replacing the debt with another may NOT be your best move.
Stay in Your Zone Paying Mortgage On Time
Sometimes doing a refinance provides more stability. This method of lowering your interest rate may be faster and less hassle. Remember to stay in your zone paying the current mortgage on time to avoid hiccups. You don’t want to risk your credit worthiness with late charges and fees and good standing. If the lender is offering to delay or stack payments on the back end of the loan, ensure this method won’t negatively affect your credit score.
Lenders Are Offering Incentives
Many of the banks and lenders are offering deals, such as no points, appraisals and locked in rates. Be sure to do your due diligence prior to signing any paperwork. You need to know all the perimeters to changing the terms and how much they’re charging for the point, if any. Remember, the mortgage company will do nothing for free.
HELOCs and Your Credit
Be aware of the terms and agreements. There are quite a few options from reverse mortgages to HELOCs where you may find your situation unfavorable in the long run. For instance, HELOCs act much like giant credit cards where you charge the entire amount. They report this huge line of credit which can lower your score tremendously. HELOCs can ultimately damage or bruise your credit score until they’re paid in full, so be sure you’re prepared.
Adjustable Mortgages and Housing Bubbles
Reverse mortgages, interest only loans and short-term adjustable rates can be risky. For instance, when the housing bubble burst in 2008, homeowners who opted in for the 2-year-adjustable rate lost more money if not their entire investment. While these types of financing options may be worthwhile, they have potential to cause more harm than good. The housing market is unpredictable, and no one knows what will happen in two years from now.
Buying with Interest Only Loans
Interest only loans are typically good for up to 5-years. However, the challenge lies with not paying down the principal. Essentially, you’re paying rent to the bank rather than building equity and paying off the mortgage. If you signed up for this home loan, consider alternatives before the term is up.
The Deal with LTVs
When thinking about refinancing, the loan to value (LTV) will play a role in the outcome. The amount owed on the home and the difference of what the property is worth will dictate your percentage of LTV. In most cases, lenders want you to be over 20% LTV for the home to qualify.
The Perfect Storm for Debt
Another key factor for refinancing could pay off debt with the equity. While this may not be the most viable solution for some, for those looking to stay in their current homes for at least 5 more years might love the idea. Buyer Beware: Make certain you prepare because it takes years to recuperate and you can also lose equity or create the perfect storm for debt and maybe even bankruptcy. Your loan officer will explain everything to you, if this sounds like a splendid idea.
Buying Land and Building Bonuses
Now, another factor to consider is buying land and building. The housing construction is offering incentives and deals where you may even upgrade to the home of your dreams. Although time can be more of an issue, it is sometimes worth the wait. If you’ve been in the same home for a decade or more and feel it’s time for new beginnings, this can be a valid way to go and we should start shopping for the perfect parcel.
Look for Short Sales and Opportunities
Besides buying land and building your own, there are many homeowners out there who are looking to move. Seems many homeowners are exercising selling faster and may take a lower offer. If this is the situation, look for deals like short sales and investments where the homeowners need to sell. You’ll be helping both you and the previous owners get out of the current situation. As your Realtor®, I insist on finding homes that are the best fit for you. You always have VIP membership with me.
Buying in a Sluggish Market
Many homeowners are now considering alternative methods for helping them stay on track financially. Besides the financial aspect, selling your home and using the equity to pay cash for another property is an excellent choice. Who can resist not having a mortgage payment? In addition, you may actually save money by not refinancing.
Can You Imagine Moving and Not Having a Mortgage?
Just imagine selling your home and moving into a new property where all you pay is your taxes. However, be sure you consider your timing and not to sell too soon. You need to speak with a professional in waiting or jumping on the sales end. If you’re finding you’ve outgrown the home or the kids have all moved, you might look for the reason to sell. But other reasons would be for people fearing a foreclosure. In that case, you want to select the best choice to ensure its something that will fit for you and your family.
NOW is a Magnificent Time to Sell
If you want to sell, this is an especially magnificent time on the contrary to what you may think. Home hunters are seeking properties and are closing deals even with an unsteady forecast. With so much ‘at home’ time, people are searching online and are ready to make a change.
The problem many homeowners face today includes postponing the future. With an economic uncertainty, you may consider your alternatives. You are not alone. In fact, there are many Coloradoans out here experiencing the same thing. In fact, you can expect more people looking to change circumstances for dozens of reasons. I’ll be here for you when you’re ready.
Your passport to finding the perfect property awaits you with C3 Real Estate Solutions.
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