Chances are your home is by far the largest purchase you’ll ever make. So, knowing how to decipher the language of loans and mortgages is key for any homeowner. Get a handle on your finances and better manage your budget with this helpful overview of loan types.

Feeling lost in the sea of home mortgage loan options? You’re not alone. We’ve taken the guesswork out of picking the best lending option for you by outlining the main home loan types. Happy house hunting!

Fixed Rate: Fixed-rate loans dominate the market more than ever right now, and for good reason: they’re cheaper than they’ve been in three decades. The percentage difference between variable-rate and fixed-rate loans has narrowed, too, and the spread usually isn’t enough to justify giving up all those years of fixed-rate security.

Long-term, fixed-rate loans are good for people who can comfortably qualify for the loan they want and who expect to stay in their homes for many years. But how long do you pay? Many baby boomers are now refinancing mortgages with 15-year fixed-rate loans, assuming they’ll make their last payments by retirement.

For example, if you borrow $150,000, you could pay it off at 6.75 percent in 30 years at $973 a month, with total interest costs of $200,243. Or you could borrow the same amount at 6.5 percent for 15 years and pay $1,307 a month, with total interest costs of just $85,199.

Adjustable-Rate Mortgage: Borrowers who are willing to sacrifice the long-term security of a fixed-rate loan can get a lower interest rate and start with lower payments if they take an adjustable-rate mortgage (ARM). That’s a particular benefit for two types of borrowers: those who expect to move within five years, and those who may want the slightly lower rate to help them qualify for the loan that puts them into the house of their dreams.

ARM borrowers, however, sacrifice simplicity. The interest rates on these mortgages rise and fall along with market interest rates and, if you’re not careful, you can find your monthly payment rising higher than you can afford. Several variables determine whether an ARM is a good deal. Here are the most important ones:

Variations

What if you have a steady income but little down-payment cash? Enter Fannie Mae, the nation’s largest source of home mortgage funds. It buys mortgage loans and creates new products designed to keep money flowing into the mortgage market.

Fannie Mae’s “Flexible 97” mortgage allows borrowers to limit their down payment to 3 percent of the cost of their home, and—unlike most lending plans—to get that 3 percent as a gift from parents, employers, or other family members.

This is just one of many loans on the market today aimed at putting buyers into homes. Borrowers who have cash flow but little or no savings, savings but no cash flow, poor credit ratings, and other special situations can find their own best mortgages by checking the following types of loans:

Balloon Mortgages: These loans often carry monthly payments as low as those of 30-year mortgages, but they’ll usually come due for payoff in five or seven years.

These can be great loans for homeowners who know they won’t be staying put, but who like the certainty of a fixed rate. They’re risky for someone who stays in a home beyond the term of the loan, because then the homeowner will need to find a replacement mortgage, move, or make that big balloon payment.

Hybrids: When you cross a balloon mortgage with a fixed- or adjustable-rate mortgage, you get a hybrid. These loans stay fixed for five or seven years, then convert to either fixed-rate or variable-rate mortgages. They have lower rates than fixed-rate mortgages but carry the risk of having the last 25 years of the loan being an unknown.

Again, they’re good for people who like fixed payments, who need wiggle room on the rate to qualify for the loan, or who expect to move before the fixed part of the loan expires.

Low-Doc and No-Doc: “Doc” stands for documentation. If you’re self-employed or have a complicated financial situation, you might shoot for one of these loans, especially if you’re in a hurry to get into a particular house or if your income is rising rapidly.

Instead of asking for tax returns, business statements, and other paperwork a borrower might be expected to provide, low-doc lenders are willing to make the loan fast and easy. But it comes at a price—maybe one-half percent more, or even a full percentage point.

These loans are for borrowers with good credit ratings who are shopping for loans worth 75 percent or less of the home’s value and are willing to pay higher rates in exchange for quick-and-easy approval.

 

To sell a property for profit, you need to ensure that your property is attractive, and a large part of that is making a first great impression. Make sure that your property makes a great impression from the curb by cleaning, repairing, and using good color contrast.

If you are interested in real estate investing for handsome profits, you need to consider the curb appeal of any property you wish to rent or sell. A big part of the real estate game is buyer and tenant psychology. One thing that researchers have found about tenants and home buyers alike is that emotional response accounts for a great deal of investor success. In other words, the investors who can appeal to a tenant or buyerís emotions — and make the tenant or buyer imagine themselves in the property — has the greatest chances of success. Curb appeal means improving the first impression that your property makes. Studies have shown that when the first impression of a property is positive, it is easier to convince a tenant or buyer to invest.

There are many ways that you can increase the curb appeal of your properties without a great deal of time and money:

1) Clean. A very tidy appearance is paramount to good curb appeal. Therefore, be sure to scrub the sidewalk, flagstones, walkway, windows, and siding. Mow the lawn, rake the leaves, clear the snow, and do everything you can to create the neatest possible appearance. You can do much of this yourself, although you may want to hire professionals or at least rent a high-pressure cleaning system for taking care of the exterior tiles or brickwork of a home. If the sidewalk outside your rental property or home is crumbled and in poor shape, you can generally contact the municipality to fix the problem.

2) Choose great colors. The color of your property goes a long way towards asserting good appeal. In general, you want to consider the colors of the properties around your property. If you are selling a suburban home, for example, located in a lot surrounded by pastel colored homes, you do not want to paint your property a right color. It would stand out too much. The right color blends well with the properties on either side of it. Make sure that the colors are fresh by applying a new coat of paint. Don’t forget the colors around the property, either. A bright green lawn or even crisp white snow contrasted with the few pine trees create visual appeal as well. If you’re interested in real estate investing, learn which colors to select, or hire a professional to select the right colors for you.

3) Repair. It should go without saying that you should ensure that everything outside is in good working order and looks attractive. This means that any broken walkways, bare patches on the lawn, and rickety shutters should be fixed up at once. You’ll find more success in real estate investing if you are selling a property that people want to buy.

 

Closing Process

Let’s start at the very beginning — what does “closing,” “settlement,” or “closing escrow” on your house mean?

Closing – or settlement as it is known in some parts of the country — is a term used for the point in time at which the title to the property is transferred to the buyer and, generally, a mortgage (or “deed of trust”) is given by the buyer/borrower to the lender.

Buying a house is an exciting time and the more you know about the process, the more relaxed you’ll be going through it. Keep reading, and we’ll walk you through what the closing process really means.

Some information about the costs associated with closing on your home should be provided to you before you put a contract on a house. If you are obtaining a loan to purchase the property, your lender has three days from the time of the loan application to provide you with a Good Faith Estimate of your loan costs so there are no surprises about costs. Within those three days you should also receive a copy of the booklet, “Buying Your Home,” which outlines the settlement process. If these two things do not occur, talk to your lender.

Once the seller accepts your sales contract, the countdown to closing begins. Timing is essential to make sure all the ingredients for a successful closing are in place for your arrival. You can shop around to select a settlement agent to prepare the documents for your closing, or you can rely on a recommendation from your real estate agent or lender. In some parts of the country, the settlement agent is an attorney, title company, or escrow company. Once a settlement agent has been selected, he or she will handle the closing process from there. If you have given the seller an earnest money deposit, the escrow agent, settlement agent, or real estate broker (this varies based on where you live), will see that it is promptly deposited into an escrow account where the funds are held until the time of closing.

Next, the settlement agent will request preliminary title work. A title professional will search and examine the public records for information related to your home’s title. This provides warnings of title flaws that must be dealt with before the property can change hands. For instance, the previous owner may have failed to pay local or state taxes. Or there may be an outstanding mortgage or judgement on the property. Title professionals work hard to see that such obligations are dealt with and resolve any issues they find well before you go to closing, if possible. If the sales contract calls for a prior mortgage to be paid off, the settlement agent will order payoff figures from the existing lender. If the buyer is assuming the loan, the settlement agent handles that as well. He/she, if directed to do so, also may order property inspections and termite reports. If it is customary in your area, the settlement agent may order a survey.

Finally the settlement agent is ready to prepare the HUD-1 Settlement Statement. The HUD-1, as it is referred to, outlines all of the costs for both the buyer and seller associated with the closing.

On closing day, the property will be transferred from the seller to the buyer. In most parts of the country, you will sign a number of documents that will be explained by your settlement agent. Check with your settlement agent for more details on how the closing is conducted in your area. Once all of the signing is done, the house is yours! Congratulations on achieving the American Dream!

You should be generally aware that the behind-the-scenes process continues after the closing. The settlement agent still must forward payment to any prior lender, pay all the other parties who performed services in connection with your closing, pay out any net funds to the seller, and order a final search of the title to your new home before finally recording all the documents needed legally to complete your purchase. But you don’t have to be involved in any of this. Your settlement agent takes care of these post-closing details!

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5 Quick and Easy Budget Upgrades

Improve the look and function of your home without spending an arm and a leg

If you’re an avid DIY’er, you’re already on your way to saving money. But with the right planning, you can transform the feel of a whole room with a single project that only costs you a few hundred bucks. Pick from a round-up of value-boosting upgrades that all come in under the $500 mark—some well under. Not only will they be soft on your wallet now, but some of these will even save you money in the future.

Refresh Your Rooms With Paint

You can give your drab, washed-out walls a burst of brilliant depth (or wash away your decorating sins with virgin white) just by picking up a paint can and having at them. That’s the power of a coat of paint: It rearranges your reality. Which is why painting is the most oft-tackled DIY home-improvement upgrade.

Add Crown Molding the Easy Way

Crown molding makes it to the top of most remodeling lists because it adds charm and value to a home, not because people enjoy spending a Saturday trying to get the corners just right. Luckily, there’s a simple way to beat miter-saw frustration. Click here for a headache free crown molding installation!

Protect Walls With an Easy-to-Clean Backsplash

If installing a traditional tile backsplash feels a little out of your DIY league, putting up one made from a single sheet of solid surface material may just be your saving grace. Shaping, cutting, and gluing up this inexpensive stock material is a weekend project most amateurs can conquer with confidence. And when you have your sleek backsplash in place, you’ll think it such a stylish protector from splashes and splatters you’ll wonder why you ever considered tile in the first place.

Cut Costs With a Programmable Thermostat

Going digital with a model that automatically changes the indoor temperature setting is fairly easy, and it can trim about $180 off your annual heating and cooling costs. Simple models that only control heat are sold at home centers for around $25. But units like the one shown here can handle many more functions, including cooling and humidifying. Typically they’re purchased through and installed by HVAC contractors, but you can get a good deal on one by buying online and install it yourself in no time.

Ceiling Fans for Summer (and Winter) Savings

The popularity of ceiling fans continues to grow as more and more homeowners discover dramatic, year-round energy savings. In summer, ceiling fans create cooling breezes, which reduce the strain on air conditioners. In winter, they circulate heated air to keep the room warm.
Installing a ceiling fan is relatively simple, especially if the space above is accessible from an attic. However, even when it isn’t, the job is still quite doable. Here, we’ll show how to replace an old light fixture with a new ceiling fan and light, in a room with no attic above. The advantage of this approach is that you don’t have to run new wiring. The fan connects to the existing cable from the old light.

 

 

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Raleigh ranks in the top five most stable real estate markets, according to Bloomberg Weekly.  It was an interesting study going back as far as records could be found to 1979, (I guess when computers entered the market).  Measuring the 50 largest markets, and comparing prices over 5 year ownership increments, the retrospective proved what we already knew.

Raleigh ranked in the fifth spot, with the risk of loss at just 9% with the worst year on record a surprising 1981-1982.  This was surprising to me, as I expected the 2008 housing bubble to be the worst year on record.  It is evidence that real estate investing cycles just like every other investment.  How quickly we have forgotten the 10% mortgage lending rates and the slow market back then.  It is my opinion that the big difference between now and then was that there were no HELOC, home equity lines to get homeowners into an upside down situation.  Back then, people put down 20% to purchase a home and they usually had a 15 or 20 year mortgage.

This is something we can all learn from.  A stable market has many factors and homeowner behaviors could be a factor.

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