Early 2011 housing trends

I know we’re already into our third month of 2011.  But it’s going to be interesting to see how the year plays out in terms of the housing market.  Will we expect to see many changes?  Or will things stay relatively similar to what we’re experiencing now with sagging prices and high housing inventory? Bankrate.com has come up with a list of some of the most common trends we’ll see in 2011, at least through summer.

1. We’ll see less refinancing of current mortgages.  Some experts say that it’s the higher interest rates that is causing this dip.  But the other side of it is that those homeowners who have equity in their home already took advantage of a refinance within the last two years, as rates steadily dropped.  So there won’t be as many who refinance in 2011.

2. It will still be hard to obtain a mortgage.  And this is just because requirements to get one are tightening up.  Lenders are being very cautious in loaning money.  With Freddie Mac and Fannie Mae requiring some lenders to repurchase sold-off loans and causing them to lose money, they’re less likely to be as easygoing in lending new money unless you have very little risk, such as a high FICO score, solid appraisals on the home, and good income.

3. New homeowners are still unsure about taking that leap and buying that first home.  Yes, interest rates are low.  However, as just stated before, it’s harder and harder to obtain a good rate.  And even though home prices are low, with so much inventory available, buyers are wary about purchasing if they’ll have to sell in the near future and have so much to choose from they often just decide to rent instead.

4. Home sellers will deal with the current economy and we won’t see any change anytime soon.  The market time will continue to stay where it’s at, higher than in the past, because of high inventory and low prices.  Best way to get your home sold is to keep it in showing condition and listen to your Realtor on a realistic selling prices.  Homes do continue to sell.  But don’t expect to get any bites by listing it above market value.

What do you think of these trends?  Are you in agreement or disagreement?  Please leave me a comment with your thoughts below or visit me online.

Mortgage myths debunked

With mortgage rates still extremely low, I thought it was important to talk about some common myths people have about mortgages and the lending process.  I don’t want any potential buyers to become dissuaded buying a house because of what they think might be true.

1. 30-year fixed rate mortgages are always the best choice.  Well, they may be for some.  It truly depends on your situation.  If, for example, you know you’re going to move (because of work, etc.) within a few years, an adjustable rate will be even lower and a better choice for you.  If you don’t plan to move for a long time, the 30-year might be best.  And also know that while the mortgage rate adjusts in a certain time frame for an ARM (usually 3, 5, or 7 years) there is a limit to how much the rate can go up (or down) over time and that you can always refinance at any time.

2. You need to pay off your mortgage as soon as possible.  I had talked about this several weeks back when I was discussing which long-term debt should be paid down first.  It’s very likely in this day and age that your mortgage rate is not the highest interest rate you have.  Usually the highest-interest debt should be paid down first.  Plus, mortgage interest is tax deductible, which is a benefit that other types of debt (credit card, for instance) doesn’t have.  As always, if you have extra money to put toward it, by all means, do so.  Just make sure you apply the extra money to the principal only, not the interest.

3. I’ve already chosen a lender and can’t choose a new one in the process of applying.  Until your loan is officially closed, that’s not true.  If you’re not happy with the lender or the rate or the process, you’re free to switch.  I’ve had clients switch lenders 30 days after signing a contract and 15 days before closing.  To make your life easier, provide your new lender with as much information as you can to ensure the process continues going smoothly.  And it’s best to shop around before signing a contract.

4. You don’t want to refinance because your 30-year loan starts all over.  It’s possible that 30 years will begin on the date of your refinance.  But you can work with your lender so that payments can be adjusted.  Since you’re refinancing for a lower rate, there’s still a good chance that your monthly payments will be lower by doing this, and, therefore, you can pay your mortgage off sooner.

5. I can find a better deal online.  I do know some clients who have closed on homes with online lenders that did a great job.  However, I also know some where it didn’t work out at all.  By finding a loan online, there’s no personal service and no one to guide you through the process or assist you if there’s a problem.  If you do go this route, make sure to verify and ask about all specific fees and read the fine print on everything before agreeing to it.

If you have more questions or need the name of a reputable lender, be sure to contact me online.

Hidden savings for home insurance

We all can benefit from saving money.  When it comes to home insurance, you’re probably aware that having a security system in your home will save you money on your premium, as will having smoke detectors and carbon monoxide detectors.  Often you can save money if you use the same company to insure your home that you use for insuring your cars.  Courtesy of Bankrate.com, here’s some other ways you can save money on home insurance:

1. Living in a gated community.  A burglar is less likely to enter your home when you have the security of gates and a person who monitors everyone who enters and exits.  And location plays a key part in the prices you pay.  If you live close to a fire department in an accessible area, it’s likely you’ll pay less than someone who lives 20 miles from emergency help in a rural area that’s hard to access.

2. Having an impact-resistant roof.  It’s obvious that everyone wants a roof that doesn’t allow rain or water (or anything else) to get into their home.  Impact-resistant roofing is graded on a scale of Class 1 to Class 4.  Class 4 is the sturdiest and it’s likely your insurer will give you a discount if you use it on your roof.   It’s also likely eligible for a tax deduction!  So if you need a new roof in your future, consider one that might cost a bit more but will save you money on insurance and taxes.

3. Being claims-free.  It’s common for you to pay less on car insurance if you haven’t had an accident or made any claims in so many years.  More home insurance companies are offering discounts for the same reason.  They not only want their customers to be loyal, but they’re saving money and passing the savings on to you.

4. New home or remodeling work.  First things first.  If you’re planning any remodeling or renovation to your home, talk to your insurance agent to see if they can offer you tips that will save you on your premium.  It makes sense because anything new brings a lot less risk for an item to fail, causing the possibility of filing a claim.  And a new home has everything new, which means it would be very rare for a claim to occur within the first couple of years from damage.

5. No smoking.  Unfortunately, if you’re a smoker or have one living in your home, the chance of a fire automatically increases.  So it’s possible your home insurance premium does, too.  And smoking is the number one cause of fires in homes.  So most companies will offer you a discount if you don’t smoke.  It won’t drop as dramatically as it does for life insurance, but it’s definitely worth asking about.

I hope some of these items will help you save some money on your insurance.  It’s possible that your specific company doesn’t offer them all, but it’s worth asking about.  Please visit me online with any more questions.

Protect yourself from carbon monoxide poisoning

With even more colder weather on the way, people will do whatever it takes to stay warm.  Many often even try to save money by not raising their thermostat and wearing extra clothes or trying to warm the home in other ways, with space heaters, and fireplaces, for example.  I thought now is as good of a time as any to let you know how to protect yourself from carbon monoxide poisoning.

First of all, make sure you own a carbon monoxide detector that’s been approved by Underwriters Laboratories.  In fact, it’s an Illinois law that all bedrooms must have a working carbon monoxide detector within 15 feet.  And even though you have the detector, don’t rely on it only.  Here’s some tips on what to avoid to help prevent poisoning.

1. Do not attempt to heat up your home by turning on your gas oven.  Not even for a minute.

2. Don’t sleep in a room with an unvented gas or kerosene space heater.

3. Don’t let your car idle in the garage, even if the door remains open.  It takes just a short amount of time for the fumes to build in the garage and in your home from turning on your car.

4. Don’t use a charcoal grill indoors, even in a fireplace.

5. Don’t use gas-powered equipment (chainsaw, trimmers, lawn mowers, etc.) in an enclosed space, or allow them to remain on in a garage when not in use.

If you do suspect that you or a family member may have been poisoned, get fresh air immediately and to a hospital right away.  Symptoms can develop fast and it’s easy to lose consciousness before you even suspect anything.  Other things to look for include nausea, severe headaches, and shortness of breath.

If your alarm does go off, get everyone out of the house.  If anyone is complaining of symptoms, get them to a hospital immediately and let them know you believe they might have been exposed to carbon monoxide.  Turn off all gas-powered appliances and ventilate the home with fresh air.

More information can be found on the Environmental Protection Agency’s Web site.  I can be reached on my Web site.