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Refinancing….Yes, No or Maybe?

by Pamela J. Windom, p.c.

 Justifications for refinancing your mortgage may include:

          ~  Lowering your current interest rate on your mortgage, thereby reducing monthly payment amounts and the overall cost of your purchase

          ~  Reducing the term or length of your loan…..this can save you thousands of dollars in potential interest paid over the life of your loan

          ~  Consolidation of your debt…..you can consolidate all of your debt at a lower interest rate and write your new mortgage interest payment off on your taxes

 

While all of these considerations are very legitimate reasons to refinance, you must consider the costs associated with the refinancing process.  Loan origination fees, an appraisal, processing fees, title fees….they all add up.  Depending upon your circumstances, if you can get an interest rate at least a full point lower than what you currently have, it is worth making the call to a qualified lender to see what refinancing may mean to your financial future.

 

Keep these questions in mind when you make the call:

~  Do I have the equity in my home to allow for the refinance? (This is especially important to ask if you plan to pay off current outstanding debt, in an effort to consolidate your debt.)

          ~  How much can I lower my current monthly payment?

          ~  How long do I plan to stay in my home?

~  How much will I pay in upfront fees to refinance?   and  Can I build some of these costs into the refinance, so that I don’t have to come up with the fees out of pocket?

 

Last, but certainly not least, be sure to consider the following:

How long will it take to recoup the cost of the refinance?

Short Sale….What is it?..... And…… Is it Something You Should Consider?

by Pamela J. Windom, p.c.

          Simply put……..In a short sale situation, a seller’s mortgage lender agrees to accept a payoff less than the balance owed on the loan.  For a variety of reasons, a seller may find themselves in a situation where a short sale may be the best option. 

          It is important to note that a short sale will appear on your credit report showing as a settlement for a lesser amount, not as a debt discharged. This means that your credit will be “less severely” impacted in a short sale situation than in a foreclosure scenario.  A foreclosure will follow you on your credit bureau report  for 10 years and will severely affect your ability to obtain credit.   

         The important window of opportunity is NOW!!!!  (Home purchases made between January 1, 2009 – December 31, 2009.)  Changes in the current tax code regarding taxation on the phantom income earned on a short sale make now the perfect time to explore a short sale.  Contact your accountant for further details or visit www.irs.gov/pub/irs-pdf/p4681.pdf  ....... either will provide you with details regarding exemption from tax liability that your lender would report on doc 1099C.  Please note **** This is subject to the borrower having a negative net worth.  Read more about this exemption at the IRS website noted above.

Value vs. Price....Consider One, When Determining the Other

by Pamela J. Windom, p.c.

Value, as defined by Webster, is "worth"…"that property or properties of a thing which make it useful or estimable".  It is common that home owners see great value in their home.  They appreciate all of the amenities, the location and all of the special qualities and memories that make a house a home.  Unfortunately, what a home will sell for in the marketplace is most often not what a home owner believes their home is worth.  This is where price comes into play.

 

To find the right price to market a property, one must not only take into account the obvious features of bedrooms, baths, square footage and of course location, location, location…..but also the amenities that add to the quality of the home.  Be advised, appraisers will not give dollar for dollar value to added amenities when appraising a home; however, when all else is equal, the amenities do make the difference.  When pricing your home for sale, remember the adage, more for the same or the same for less and you will have greater success in getting your home sold…..particularly in a declining market.  Purchasers want to know that they are getting a good value for their dollar.

 

What a home is worth ultimately ends up being in the eye of the beholder. 

Absorption Rate...What is it? & Why it pays to be in the know.....

by Pamela J. Windom, p.c.

Real Estate lingo tends to be baffling at times, but understanding the meaning behind the terminology can be of great benefit.  From time to time, I will address different terminology that is not only beneficial to know, but also understand, so you can put it to good use in formulating a plan for the sale of your home. 

Today's Term.....Absorption Rate

Absorption Rate is the length of time it would take to sell the inventory of a given area at the current sales rate.  It is a valuable tool for use in determining a price range for marketing a home for sale. To calculate the current absorption rate, simply take the number of homes that are currently on the market and divide that figure by the number of homes that sold last month……this will equal the absorption rate.

As you prepare to list your home for sale, knowing the current market activity is a must.  I assume that you aren't placing your home on the market just for fun and that you actually do desire/need to sell your home.  Being practical from the "get go", will often save you time and money in the long run.  In a market where prices are declining, being in front of the pack is important.   (This means being competitively priced, so people not only notice your home, but are attracted to it, because it is a good deal.) Bear in mind, a good deal, doesn't mean a fire sale on your end.  If you are priced right from the beginning and your home sells quickly, isn't that better than sitting on the market for 6 months, trying to sell your home, only to watch the market values decline and getting less for your home than you would have if you had priced it ahead of the market to begin with?  Bottom line…..it is better to have the market chase you, instead of chasing the market down.   

 

Knowing Your Options During Difficult Times is a Must!

by Pamela J. Windom, p.c.

         Home ownership comes with certain responsibilities...payments, upkeep and the like.  We enter into it with optimism and in most cases, great pride, knowing that we have worked hard and met one of those milestone goals in our life.  It is a momentous occasion when one actually takes title, is handed the keys and enters their home for the first time.  While everyone shares these final steps of the journey in common, once you cross the threshold, the tale of home ownership becomes an individual journey.  Life happens, circumstances change and what once seemed like the ideal situation can become the source of great stress.

         Some of the most frequent situations we as realtors come upon, that can change your circumstances in the blink of an eye, are loss of a job, divorce, death and medical emergencies.  In our current economy, more and more people are finding that their jobs are being cut and they do not have a contingency plan in place that can bridge the gap until they secure a new job.  It is becoming a more prevalent scenario…..bad things are happening to good people who have had the best of intentions.

         If you find yourself unable to make your house payment, regardless of the reason, I first and foremost encourage you to contact your mortgage company to see if they have options available that will help you avoid foreclosure.  A foreclosure will follow you for years on your credit record. 

        Because of the current economic situation, many lenders are finding creative ways to help keep people in their homes.  The bottom line is... lenders are in the business of loaning money, not owning real estate.  They really do not want to take possession of your home and carry it on their books until it can be sold.  Options that are currently coming to light are reductions in interest rates, delayed payment options, reductions in loan balances and the willingness of lenders to consider having folks sell their homes as a short sale.  Speak with your lender!!!!  Did I say that loudly enough…..SPEAK WITH YOUR LENDER!!!!  Do not stick your head in the sand.  Find out what your options are.  Take control of the situation and find out what will cause the least amount of damage to your future credit rating.  If a short sale is the best scenario for you, call me (541-431-6498).  You need a professional to guide you through the process and I will be happy to help.    

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