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November 2014     






Avoiding Common Mortgage Mistakes

There is no doubt that the mortgage process can be an intimidating and confusing process for the uninitiated. Let's look at the situation: you are putting yourself into debt for the next 15-30 years, signing stacks of paperwork, and learning about new fees every day. In such a stressful environment it easy to make mistakes and the worst part is that you might never even know that you made a mistake.

In order to make sure that you do not pay for that one mistake over the next 30 years it is important to do your homework and gain an understanding of the mortgage process. Below you will find a list of some of the more common mistakes that mortgage brokers and lenders see every day.

Credit problems: It is important to obtain a credit report at least 180 days before you are planning on applying for a mortgage. This will give you time to challenge any mistakes or discrepancies that appear on your report before it gets into the hands of your lender. This will also give you an idea of the legitimate factors that are hurting your FICO score and time to do something about them, such as paying an overdue bill or paying down credit card debt.

Qualifying for a first-time buyers program: If you are a first-time home buyer then you might be able take advantage of the lower rates offered by the many first-time homebuyers programs. These programs were designed to help individuals with damaged credit or small down payments achieve their dream of home ownership. The best way to find out more information on these programs is to call or visit the website of the housing agencies for your state, county, and city to see if you are eligible.

Waiting until the last moment to get approved: Homes more fast in our market and it is important that you are ready to move when you find that perfect home. If you are going to buy a home there is no reason not to turn in the loan paperwork and get approved before you start the home buying process. Horror stories abound regarding buyers who found their dream home and then initiated the loan approval process only to learn the home had already been sold by the time they got their paperwork back.

Not shopping for rates: Some homebuyers are not aware of the wide range of rates that are on the market and could fall victim to subprime lenders. Subprime lenders specialize in securing financing for individuals with damaged credit, at a premium, and occasionally people with good credit unknowingly get stuck with such a loan. It pays to make sure that you know the prevailing interest rate for individuals with your FICO score. If you go to MyFico.com you can enter your FICO score and get an idea of the cost of financing in your area.

Paying Junk fees: Some lenders attempt to line their pockets with a variety of fee, some of which are legitimate and some of which are not. Once more it pays to do your homework beforehand. Contact several different lenders to find out their rates, loan points charged, and any other fees associated with the application. Once you decide on a lender they should give you a good-faith estimate of closing costs, which should include any extra fees. Inquire about any additional fees and try to negotiate the more excessive charges down. If your chosen lender is unwilling to negotiate take the estimate to someone else and see if they will be able to beat it.

Closing Costs: Plan ahead for the closing costs. The day that you are scheduled to get your loan you will also need to pay for expenses such as; attorney's fees, title insurance, and other lender fees. Closing costs can be anywhere between 2 and 7 percent of the selling cost of the home. The good faith estimate that you received from the lender will give you a good idea of how much you can expect to pay and make sure that you have enough to cover the cost in your bank account.

Cash on hand after closing: After scrimping and saving every penny you were able to secure your mortgage and have moved into your new home. Suddenly, out of the blue your car breaks down and you are stuck with a hefty bill and you run the risk of not having the money to cover your first mortgage payment. When budgeting for your new home it is a good idea to have enough cash to cover your expenses for several months. This will help you get over any unexpected expense speed bumps.

Fuel Saving Driving Strategies

Gas prices are stabilizing, but for those of us who have been driving for a while they are still unbelievable high. In light of this, I have decided to include some non-real estate tips in this months newsletter that will help you to stretch your fuel budget a little further.

Observe the speed limit. Those of us with a lead foot should look to our gas gauge rather than our speedometer. Over 50 percent of the energy required to move our vehicle is exhausted overcoming aerodynamic drag. The faster you drive the more drag you can expect. Studies have shown that when you drive over 60 mph, ever 5 mph can be equated to paying an additional $.10 per gallon for gas.

Use overdrive. Most automatic vehicles come equipped with an overdrive gear. The overdrive gear allows the driver to maintain freeway speed while decreasing engine speed. Using the overdrive gear will enable you to reduce fuel consumption and engine wear.

Cruise Control. Cruise control will enable you to maintain a constant, steady speed rather than a variable speed and as a result helps reduce fuel consumption.

Anticipate Traffic. In these times it is almost impossible to avoid traffic. However, careful planning can help minimize the amount of traffic that you get stuck in. By avoiding traffic you will subject yourself to less stress and at the same time reduce fuel consumption by eliminating stop and go driving.

Avoid Unnecessary Idling. Most modern cars do not need to be warmed up. If you are waiting in the car at the drive-in or picking up a friend, think about turning off your car rather than leaving it running. In the long run, this will help you reduce fuel consumption, save money, and is more environmentally friendly.

Tire Maintenance. Properly inflated tires are important. Though your tires may appear properly inflated, you should check your air level frequently in order to ensure recommended inflation. On average, tires lose one psi per month and one psi for every 10-degree drop in temperature. Under inflated tires can cause fuel consumption to increase by as much as six percent, cause tires to wear faster, and make it harder to handle your vehicle.

Replace Oil Regularly. By regularly replacing your car's motor oil you will increase the life of the engine and increase engine efficiency. Some oils also contain additives that reduce friction and may increase fuel economy by as much as three percent. Such fuel efficient oils are usually labeled with the Energy Conserving API label.

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Your money

Insulating your Home

Have you noticed that your home seems too hot in the summer and too cold in the winter? When the windows and doors are closed, do you still hear a lot of noise from outside? If you answered yes to these questions then you could be suffering from a lack of insulation.

Insulation is a critical component in protecting your home. It blocks the flow of unwanted outside air into your home and prevents the loss of conditioned air from your home.

If you live in an older home there is a good chance that your home is not insulated to modern standards. The reason is twofold: energy experts have revised their estimation of adequate insulation and insulation tends to settle or become damaged over the years.

The best way to determine if you have enough insulation is to hire a local contractor to conduct an energy audit of your home. If you would like to do it yourself, I suggest finding literature online or in print in order to do it right.



Market

Existing-Home Sales Rebound in September

After a modest decline last month, existing-home sales bounced back in September to their highest annual pace of the year, according to the National Association of Realtors®. All major regions except for the Midwest experienced gains in September.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 2.4 percent to a seasonally adjusted annual rate of 5.17 million in September from 5.05 million in August. Sales are now at their highest pace of 2014, but still remain 1.7 percent below the 5.26 million-unit level from last September.

Lawrence Yun, NAR chief economist, says the improved demand for buying seen since the spring has carried into the fall. "Low interest rates and price gains holding steady led to September’s healthy increase, even with investor activity remaining on par with last month’s marked decline," he said. "Traditional buyers are entering a less competitive market with fewer investors searching for available homes, but may also face a slight decline in choices due to the fact that inventory generally falls heading into the winter."

Total housing inventory at the end of September fell 1.3 percent to 2.30 million existing homes available for sale, which represents a 5.3-month supply at the current sales pace. Despite fewer homes for sale in September, unsold inventory is still 6.0 percent higher than a year ago, when there were 2.17 million existing homes available for sale.

According to Freddie Mac, after falling for four consecutive months, the average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 4.16 percent in September from 4.12 percent in August. Despite the slight increase, interest rates are 33 basis points less than a year ago (4.49 percent).

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