Refinance Your Mortgage and Save Money

Refinance Your Mortgage and Save Money

With all the hubbub about the mortgage industry right now, you may be feeling you should stay away from mortgage lenders. But at least one positive thing has come out from all economy troubles…low interest rates. Rates are at record lows right now, making it a great time to refinance your mortgage.

If you currently have a mortgage, check to see what your rate is. The rule of thumb is that if you can lower your interest rate by a point or more, you should refinance. For example, our currently mortgage interest rate is 6.875% and we have the opportunity to refinance at 5.5%. This change will save us over $120 on our monthly payment, not to mention thousands of dollars in interest payments…definitely worth it.

A great resource for determining the saves is Bankrate.com. They have tons of financial calculators including a refinancing one. The site also provides national interest rate averages and will even give you suggestions on mortgage lenders in your area.

For the ease of refinancing, you may be better off contacting your current lender to see what rates they are offering. Also check other institutions in your area for a comparison. Most lenders will post their current rates on their websites. This is an easy way to research rates in your area. Also, look for a large capacity lender. Smaller banks make money off of selling their mortgages to larger banks. If you start out at a large bank, you may be able to get a lower rate.

Still be weary of the “too good to be true” lender. Go with a lender that is reputable…do your research. Do not sign any papers until you feel entirely comfortable with your lender and the terms of the loan.

Also, when calculating your savings, be sure to include closing costs. Closing costs often vary due to the amount being borrowed, but figuring about $2000 is a good average. Often these fees can be rolled into your refinance, but you will still need to pay at least the appraisal fee upfront.

Not only can you save money, you can also save years of payment. Be sure to ask about shorter term mortgages that may not save you money on your monthly payment, but will surely save you thousands in interest payments by paying off your home in less time. Consider reducing from a 30 year to a 20 or even 15 year. If you have a 20 or 15 year, look at a 10 year or the rare 7 year. You will save big time that way. If you have ever paid attention to the amortization schedule, you will see the huge chunk of your monthly payment goes towards interest. This is a great way to pay less to your lender…more money in your pocket.

Depending on the type of loan you currently have, you may qualify for a streamline refinance which can save you time and money on closing costs. Ask your lender if you qualify for that program.

Now is the time to refinance. Get online and start your research, then call you lender to begin saving. It may seem intimidating, but you will be glad that you did…I know I am!

New Home Price Negotiating Tips: How to Negotiate Home Prices and Terms with Home Sellers

The following is a guest post from Houston, Texas real estate developer and entrepreneur Tracy Suttles.

Overall Home Price

The most obvious new home negotiation point is the overall home price. When determining the price to be offered for the home, it is best to use the asking price of the home as a last resort. This number is typically just what the owners want to receive for the house and may or may not reflect its actual value. Working with a Realtor, comparables of recently sold homes in the area can be used to determine an appropriate home price. Use an average of homes that are similar in size, design and maintenance level.

If the real estate market in the area is a seller’s market, be prepared to pay top dollar for the home. The buyer may even have to compete with other offers when the offer is made which gives the seller the upper hand in the negotiation process. If it is a buyer’s market, the buyer may be able to make a low-ball offer that is below the perceived fair market value of the home.

Home Sale Contract Contingencies

In addition to overall price, the buyer can also negotiate based on other terms or contingencies. For instance, the sales contract may be contingent on an appraisal of at least the offer, an approved mortgage loan at a certain interest rate and a satisfactory inspection of the home.

New Home Concessions and Terms in Sales Contract

In a buyer’s market, the buyer can likely negotiate additional concessions into the contract such as a carpet or paint allowance or additional sod and landscaping. A buyer may also negotiate a portion or all of the closing costs into the price of the home. For instance, the buyer may make an offer of $200,000 for a home that also includes the seller paying for $5,000 in closing costs. This is in essence offering the seller $195,000 for the home.

Depending on the buyer’s situation, it may be necessary to negotiate certain terms into the sales contract. These terms could include the sale of the buyer’s home before this sale is complete. Or it may include a shortened or extended time before the home is closed.

A sales contract should not be signed unless all terms have been reviewed by both the buyer and the seller. Once the contract is signed, it will be difficult to walk away from the contract without giving up the retainer that was paid by the buyer upon acceptance of the offer. Negotiate the sales price and terms before signing and know that if it is not in the contract, the buyer nor the seller can be held to it.