Monthly Archives: July 2014

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30 07, 2014

Home Warranty: What it is and how it works

July 30th, 2014|Blog|

home-warranty

 

What is a home warranty?

A home warranty is a home protection plan that covers the cost of replacing or repairing almost any malfunctioning system or appliance in your home.  Depending on how comprehensive the policy is, the cost of a home a warranty will typically range from about $200-$600 a year.

 

How does a home warranty work?

If your air conditioning unit breaks down, your dishwasher starts leaking, or your clothes dryer burns out, you call your home warranty provider and make a report.  The warranty company will call a third-party contractor it has an arrangement with, and the contractor will get a hold of you to schedule an appointment. Someone will be sent to your house to repair or replace the broken appliance. The warranty provider will cover the costs of the repair or replacement, but you may be responsible for a co-pay that can range from $50-$125.

 

What does a warranty cover?

Each warranty company/provider is different, but typically these things are covered:

 

    • Systems: air conditioning, heating, electrical, plumbing, water heater, garbage disposal
    • Appliances: refrigerators, dishwashers, dryers, washers, range/oven/cooktop, built-in microwave oven, ice maker, trash compactor, garage door opener, built-in processors

 

Who should buy a home warranty?

A home warranty is a good idea for first-time home buyers since they may not have a lot of experience maintaining a home, and might have limited savings after purchasing a home. As with other financial decisions, you need to examine your needs to determine if a home warranty is right for your particular situation. But in general, you should consider buying a home warranty if:

 

    • The home you’re purchasing  is very old
    • The systems and appliances in the home you’re purchasing are old
    • Your savings has been depleted by your home purchase and you don’t have a lot left over to […]
24 07, 2014

Mortgage 101: Understanding Mortgage Points

July 24th, 2014|Blog, Mortgage 101|

points

What are mortgage points?

Anyone who has ever shopped for a mortgage has likely heard about mortgage points. Mortgage points describe certain closing costs charged by the lender. There are two kinds of mortgage points: discount points and origination points. In both cases, a point is equal to 1% of the loan amount. For example, on a $150,000 home, one point is equal to $1,500.

 

Discount Points

Discount points are paid at closing to get a better interest rate on your loan. They are considered prepaid interest and are tax deductible. The more points you pay, the lower the interest rate on your mortgage. Borrowers typically pay anywhere from zero to 3 discount points, depending on how much they want to lower their rates. Buying discount points is a good strategy if you plan to keep your loan for many years, but may not make sense if you plan to refinance or sell your home within a few years.

 

Origination Points

Origination points are used to pay for the costs of obtaining the loan, known as the loan origination fee. The origination fee will appear as a percentage of the loan amount. For example, if they charge you 2 points on a $200,000 loan, this will cost you $4,000 at closing. The fee may be in addition to other lender costs, or a lump sum that covers all of their costs. For example, you might be charged one mortgage point plus a loan processing fee, or you may just be charged two points and no other lender fees.

 

16 07, 2014

Closing Tips for First-Time Home buyers

July 16th, 2014|Blog|

Closing-Tips1

 

Here are some tips to help first-time home buyers navigate the closing processes.

 

1. Final Walk-through – Make sure the home is ready.

Before you finalize the paperwork and sign on the dotted line, you’ll want to do a final walk through to inspected the property and make sure the condition has not changed. If anything is dramatically different since the time the contract was accepted, or if agreed-upon repairs aren’t completed, make sure to bring it up immediately. Take a careful look at the home as this is your last chance before you officially take possession.

 

2. Signing the papers – Make sure all of the paperwork is in order.

There will be a lot of paperwork at closing, so be prepared. If you can, review all documents ahead of time for misspellings and missing or incorrect information. Mistakes on closing documents can hold up a closing, and if they can’t be easily corrected, it could be delayed by hours or even days. It’s important to take your time and review all of the documents that you are signing and ask questions if anything is unclear.

 

3. Money – Make sure your funds are ready.

Be sure you know the exact amount you’ll need to bring to closing to cover your closing costs.  It’s also important to find out how the funds are expected to be delivered. You can’t pay your closing costs with a personal check, so make arrangements in advance to have the funds transferred, or bring the payment as a certified check. Make sure you have all of the information you need ahead of time, so you don’t run into any delays or unexpected snags at closing.

 

 

 

10 07, 2014

How Long Does it Take to Buy a Home?

July 10th, 2014|Blog|

clockIf you are considering a home purchase, you probably want to know how long the whole process will take. Unfortunately, there is no easy answer to this question. The time it takes to buy a home varies in each situation.  The typical time it takes to close on a home loan once you’re under contract is usually 30 to 45 days. However, from financial preparation and finding the right home, to getting under contract and completing the closing process, it tends to take a lot longer. Here’s a closer look at some of the stages and steps in the home buying process.

 

Building Credit & Saving

Before you purchase a home, you might need to spend some time cleaning up your credit or saving for a down payment in order to qualify for a loan. You need to have the necessary credit and assets, or you won’t be able to secure a mortgage. Correcting mistakes on your credit report and reducing your debt are both effective ways to improve your credit, but it can take a while to see results. Learn more about the steps you can take to improve your credit here. It can also take a considerable amount of time to save up for a down payment, especially for first-time home buyers. Plan ahead and start building up your credit and saving for a down payment as soon as possible.

 

Finding the right home

Finding the right home is no easy task. According to the National Association of Realtors, the typical homebuyer searched for 12 weeks and viewed ten homes before getting under contract. It may take you […]

3 07, 2014

Mortgage 101: APR vs. Interest Rate – What’s the difference?

July 3rd, 2014|Blog, Mortgage 101|

APR

 

You will most likely encounter the terms APR and interest rate  when you start looking for a mortgage.  Many buyers don’t understand the difference between these two terms and mistakenly consider them to be the same thing. But APR and interest rate are very different, and it’s important for borrowers to compare both. Here’s a closer look at  APR and interest rate.

 

Interest Rate

The interest rate refers to the amount that is charged for borrowing money and is expressed as a percentage. Fees and other charges are not included in the interest rate. The size of your monthly principal and interest payment is determined by your interest rate, along with the term and loan amount. There are several factors that may affect your interest rate:

–          Length of the loan

–          The value of your home compared to the amount you borrow

–          How long you plan to live in the home

–          Your credit score

–          Property type

–          Mortgage program

 

APR  

APR stands for annual percentage rate. APR is a combination of two things: the interest rate of the loan, plus lender fees, closing costs any other fees required to finance the loan.  Because of this, your APR will usually be higher than your interest rate, and the higher the loan fees, the larger the APR will be relative to the rate.  For example, if there are no fees and the rate is fixed, the ARP will equal the rate. APR is a way to show you how much it costs to borrow money at your given interest rate with the particular closing costs and fees associated with a mortgage loan. APR reflects the total cost of borrowing money for a mortgage over the […]

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