Should I Renovate My Current Home or Move To a New One?

There comes a time in many families lives when they realize their First Home no longer fits their needs. Maybe more space is required for a growing family or a pay raise allows you to upgrade to something a little nicer. Before deciding whether to renovate your current home or move into a new one, there are a lot of things to consider.

First, you have to think about finances and your future plans. What is your current home worth?RENOVATION What would your new home budget be and would it provide you with a significant improvement in the current market? What is you dream home? Could renovations even make this possible within your budget? These are all things to consider very seriously when making your decision.

After you ponder these things and determine that both options are possibilities, there are some more specific pros and cons to each choice.

MOVING
Pros:
♦   Fresh Start – Moving allows you to start fresh with a new house in a different location. Whether you go across the street or across the country, it is a very exciting change.
♦   Taxes – In some cases, moving can qualify you for certain tax breaks and your new location may have cheaper taxes. Keep in mind, however, it may be more expensive as well. Be sure to ask your realtor about all of this when looking.
♦   Getting A Mortgage – A new home can allow you to go into the mortgage process with more experience and maybe more money than you had before.
Cons:
♦   Moving – Moving is a brutal process. With packing and shipping and unpacking, it is an extremely stressful process that many people would like to avoid if possible.
♦   Cost – There are a lot of fees associated with moving. Aside from house price, paying for movers and realtor fees alone can seem overwhelming. These are the major two, but other costs can sneak up on you as well.

RENOVATING
Pros:
♦   Your Design – When looking at a new home, you often have to accept that there will be one or two features in every house that you are not in love with. When renovating, you can make sure everything is designed and carried out to your exact specifications.home renovation
♦   Keep Your House – Renovating allows you to have an updated version of the house you originally fell in love with. This allows you to keep your community connections and be in the same neighborhood.
Cons:
♦   Unpredictable Expenses – Often times when doing renovations, issues will be found under the surface that can cost extra time and money. This can force you to exceed your budget or have to cut out some of the changes you would have liked to make.
♦   Huge Mess – While your renovations are taking place, your home will be a mess and in some stages, may be unlivable. If you can stay, it will be loud and stressful. If you have to leave, hotels and other expenses add up quickly.

While these tips can help you decide whether to renovate or move, sometimes there is a third option, both. If you have an ideal home in mind that can’t be created out of your current house, it can be hard to find it on the market as well. Buying a house that has the space you need and many good characteristics, but could use work, can be a great option. Houses that require some work can be bought cheaply and renovated into the home of your dreams. Products like the Norcom Dream Home LoanTM even make it possible to finance your new mortgage and renovations together, all in one loan.

Whether deciding to move, remodel, or both, it is hard to go wrong. The most important thing is to make sure the decision is well researched and that the entire family is on board. Accomplish that, and you will be sure to make the right choice.

Advertisements

What is A Mortgage Rate Lock?

At some point during the mortgage application process, the borrower must exercise their agreement with the lender to lock in the rate for their final mortgage. 

rate lockWhat is a Mortgage Rate Lock?
A Mortgage Rate Lock protects the borrower from the risk that interest rates will increase during the rate lock period. It guarantees that the lender will offer the borrower a specific combination of interest rate, points or interest rate credit at the closing of their loan.
If market rates rise after the rate is locked, the borrower will still get the lower rate, to the lender’s detriment. But there’s a downside: If rates fall after the rate is locked, the borrower might not be able to take advantage of that opportunity. 

When Can a Mortgage Rate be Locked?
Buyers typically must wait until a seller has accepted their purchase offer for a specific property before they can lock in an interest rate for their mortgage. In addition, the lender must have certain information about the borrower and the details about the transaction before a rate can be locked. This includes receipt of all signed legal disclosures, the borrower’s credit score, anticipated loan-to-value ratio, property type and the borrower’s signed intent to proceed with the transaction. Until all pieces of the puzzle are in place, the lender can not accurately commit to any final interest rate, cost and terms.

How Long Can a Mortgage Rate be Floated?
When a mortgage rate is locked depends on the borrower’s tolerance for risk. The purchase and sales contract dictates when the loan must close. The borrower may opt to let the final mortgage rate ride or “float” with the market until they feel they can get the best deal. Of course they run the risk that the market will turn in their time period and rates will rise from current conditions.
A good mortgage loan officer may have, in good faith, projected a final mortgage rate for processing purposes, but the mortgage application cannot be approved until the final rate has been locked in.
In today’s mortgage processing environment, a mortgage rate could be floated until about 14 days prior to the prescribed closing date. This should give the lender to deliver the final disclosures, the underwriter time for a final review of the application and to issue a “clear to close,” and time for the closing deportment time to deliver closing package to the closing agent.

Should You Choose a Longer Rate Lock Period?
Borrowers are well advised to choose a 45 to 60 day rate lock period to ensure they can get the agreed upon rate even if there is a delay in processing their mortgage application. If a loan fails to close within the rate lock period, the borrower will charged the higher of the original lock and the current interest rate. If rates are higher, the borrower may be offered the opportunity to extend the original rate at a cost of 0.25 points for each 7 day period. (A point equals 1.00% of the base loan amount)

How Much Does a Rate Lock cost?
lockMost lenders will not charge for a Mortgage Rate Lock.  . But a rate lock isn’t free. Rather, a longer rate lock typically involves a higher interest rate, which is more expensive for the borrower. The interest rate or “pricing” difference between a 15-day rate lock and 60-day rate lock might be as little as one-eighth or could be as much as half of a percentage point. The longer period protects the lender from potential market deterioration. The shorter the rate lock period, the more risk the borrower is taking on, but they should be getting a better price.”

No Mortgage Loan officer is an interest guru. But he does understand the lender’s commitment to you and will do his best to honor the rate lock obligation. However, the complexity of your application and issues like: failure to provide additional documentation in a timely manner, appraisal concerns, possible title problems all add time to the process.

There is rarely a reason not to lock a loan as soon as you can. Interest rates change daily, sometimes hourly. To protect yourself against the volatility of the marketplace, it’s a good idea to lock your rate once you are satisfied with the rate. The reason some buyers dislike loan locks is because they want to grind every dime out of a transaction that is humanely possible. Just remember that if the rate was acceptable when it was locked three weeks ago, a drop of an 1/8 of a point or so isn’t the end of the world. You don’t need to be that kind of borrower to get a good deal.

Read more: http://www.bankrate.com/finance/mortgages/questions-rate-lock-answered.aspx#ixzz3cy8lb29i

What Not To Do When Buying Your First Home

referralDeciding to buy your First Home is not an everyday activity. There’s a steep learning curve, which explains why mortgage professionals see the same blunders over and over again. Here are six common — and costly — mistakes many First Home Buyers make.

1.  Believing the Listing Agent is Your BFF –  Unless you hire your own buyer’s agent, the agent selling that house works for the seller

2.  Setting an Unreasonable Time Table – Assuming you’ve been Pre-Approved for a mortgage and it’s a fairly simple deal, you may be able to close in 30 days, but 45 to 60 is more common,. Foreclosures may take 75 to 90 days and short sales have been known to take 6 to 9 months.

3.  Financing – One and Done – There should be a chemistry that develops between you and your loan officer. Educate yourself on the complicated mortgage process and the whole home buying experience

4.  Trash Talking as a Bargaining Technique – If you’re making an offer, you want to stress what you like about the place, Don’t forget: You’re a guest in someone’s home. Forgetting to be polite is a common home buying mistake.

5.  Believing You Can’t Afford Professional Advice – Sometimes the right professional advice from an attorney, home inspector, insurance agent saves far more than it costs. Do not hesitate to ask for it.

6.  No Reserve Fund – Many home buyers are tempted to stretch as far as possible – and drain all available savings just to buy their dream home. There are going to be some unforeseen circumstances that arise, either personally or with the house. Plan to keep an emergency fund available after closing to address those unforeseen situations that might arise, either personally or with the house.

Read more: http://www.bankrate.com/finance/real-estate/mistakes-homebuyers-make-1.aspx#ixzz3a7khAOUj

Always Get a Home Inspection

A client was referred to me by her attorney as she was in the process of buying the family home froFirst Homem her mother’s estate. She had been caring for her mother, and after her passing, she and her 5 siblings agree that she would buy the home. The price had been agreed upon and the final piece was the mortgage. We met to begin the mortgage process. As it was her First Home, she had a lot of questions and so did I. As part of her “home buyer education,” I asked if she had a Home Inspection done?

Home InspectionShe felt that one wasn’t necessary since she had lived in the “homestead” all her life and was buying the house from her 5 brothers and sisters. I explained that it really was for her protection and peace of mind to know what might be the physical limitations of the old house. After some encouragement, she finally agreed that it was a good idea and I for a local inspector to meet with her to check out the house.

 A Home Inspection is a visual inspection condition of the structure and to identify components that aLostre not performing correctly or items that are unsafe. After seeing the results of her home inspection, my client wasn’t sure what to do as there were numerous issues. I gave her the name of a local home improvement contractor to get an estimate of what the repairs would be. The estimate she got was just over $10,000. OK, now what do we do? I suggested that she speak to her attorney and share a copy of the home inspection and estimate with the other 5 siblings.

Long sHappy New Hometory short the purchase price was reduced and we were able to move forward with the purchase. Everyone was happy,  

The moral of the story …  Always get a home inspection done by a licensed inspector, no matter who is the seller!

P.S. FHA does not require a home inspection unless the appraiser notes a glaring deficiency in the property. However, FHA requires the buyer to sign a document “For Your Protection: Get a Home Inspection” encouraging the buyer to be sure that the home they are buying is satisfactory in every respect.