US New Home Sales Drop 12.8% in July

Sales of new U.S. homes fell a steep 12.8% in July, but the drop came after revisions to June sales showed the sales highest growth in 12 years.

The Commerce Department said Friday that new homes sold at a seasonally adjusted annual rate of 635,000 units. That’s down from a sharply revised upward rate of 728,000 in June. So far this year, sales have risen 4.1%, a sign that buyers are beginning to respond to lower mortgage rates.

The volatility in home sales reflects broader uncertainty in the housing market. Buyers have been eager to take advantage of wage growth and historically-low mortgage rates. The average rate on a 30-year loan declined to 3.55% this week, according to mortgage buyer Freddie Mac. The revisions to the June figure, coupled with a rebound in existing home sales in July according to data released by the National Association of Realtors, show sales reacting largely well to lower borrowing costs.

However, the rush has further constrained inventories at a time when new construction is limited. Robert Frick, a corporate economist at Navy Federal Credit Union, said that while the revised June figures were a positive sign for the market, low inventory remained the core problem dragging home sales growth.

“The average sales price for a new home was $388,000, and half of the home buyers are looking for a sub $300,000 home. Until more, less expensive homes and condos come to market, millions of Americans will be shut out of homeownership,” Frick said.

A big 50% jump in sales in the Northeast was offset by declines in the West, Midwest, and South this month.

The median sales price fell to $312,800. That is down 4.5% from a year ago but marks the highest level since April.

source: usa.inquirer.net

4 Reasons Why You Should Get Pre-Approved for a Mortgage

The first thing to do before deciding on whether or not to buy a home is to set aside a budget., however, trying to set up a budget by yourself can prove to be a very taxing and difficult task. The amount of debt your holding, your down payment amount, your credit score, as well as your job history are all factors that you need to take into consideration before creating a budget for your new home. As such, it is highly recommended that you consult with a qualified lender in order to be pre-approved for a mortgage. Then and only then should you set-up a consultation with a real estate broker.

Getting pre-approved for a mortgage can be used to your advantage in a financial situation. Below are 4 reasons why you should get pre-approved for a mortgage, and how doing so can be leveraged to your benefit.

Boost Your Credibility

Getting pre-approved for a mortgage demonstrates to all the parties involved that you are not only committed to buying a home but are also capable of doing so. Most sellers don’t want to deal with uncertainty before they sell their home, and you can showcase your seriousness about the transaction by getting pre-approved for a mortgage. In fact, your offer may directly depend on getting a mortgage approved, and the lack of assurance can cause trepidation in the seller’s mind; they may worry that the deal will fall through, wasting their time and effort.

As a result, some buyers will only work with people who have been pre-approved for a mortgage so that they have some peace of mind. For instance, in the event a seller has multiple prospective buyers, the chances that you will be their choice will go up exponentially if you’ve been pre-approved, as it will significantly boost your credibility and reliability as well.

Helps Your Realtor Work More Effectively For You

Nothing defines a budget more effectively than being pre-approved for a mortgage. Your agent will now have all the tools and information needed to help you buy the home of your dreams. Having that precious intel will allow them to focus your search far more efficiently. You can prioritize according to your budgetary restrictions, and also go through your wish list by clearly identifying your needs and preferences. What’s more, your real estate agent will use the information you’ve provided to hone in on specific neighbourhoods, getting you the home of your dreams quicker than you can say, ‘pre-approved mortgage’.

Being pre-approved also means your agent can use that information to negotiate a better deal for you. The leverage that a pre-approval can provide should never be underestimated, nor should the competitive advantage that it provides prospective buyers over their non-approved counterparts. Think of a pre-approved mortgage as a bargaining chip that your agent can use to help you get the best possible price or value for your hard-earned dollar, as the seller will know that the offer on the table is solid.

Enjoy Peace of Mind

By having complete control over your finances you will avoid the ambiguity that often comes with a new home purchase. The lender should outline all of the clandestine costs that you may not have been aware of prior to purchase and should explain what you can and can’t afford so that you don’t suffer financially in the long run. A pre-approved mortgage means you don’t need to worry about accidentally overextending your finances or any fees getting overlooked in the process.

The last thing you want to do is make an offer on a home that you simply cannot afford, either now or long term. Applying for a mortgage — any type of mortgage — can be arduous and stressful. Getting pre-approved takes care of matters up front, and having your finances in check allows you to go through the transaction with both control and confidence.

Smart Business Sense

Believe it or not, getting pre-approved for a loan is a fairly easy process. You don’t need to worry about paying any fees either. You can have the peace of mind that there is no obligation on your part even in the event that you are pre-approved for the mortgage. In other words, there is no pressure or costs to worry about, so why not see if you qualify? There is literally nothing to lose other than a few moments of your time, and being pre-approved can be the difference between owning the home of your dreams and settling for mediocrity.

You can also use the opportunity to speak to a financial advisor. They will address any fears or concerns you may have, and help you make sound financial decisions right from the get-go. In fact, they will help custom tailor a solution that caters to your unique needs, your future plans, your current budget, as well as your future earning potential. With so many advantages and no real drawbacks, it just makes smart business sense to consult with a financial advisor to determine if you qualify for a pre-approved mortgage.

When Playtime is Over

Shopping online for your fantasy home can be a fun experience, but when you are actually serious about turning your dreams into a reality, then getting pre-approved for a mortgage can help create a solid foundation before you take the final step and become a homeowner.

For more more information about getting pre-approved for a mortgage, call Northwood Mortgage on +1 (888) 495-4825 or contact us here.

source: northwoodmortgage.com

Owning VS. Renting: Which Is Better For You?

It’s quite common to get frustrated when renting. After all, you’re paying often expensive rent each month, sometimes even putting work into the property, and while it does cover your accommodation, once you move out you’ve got nothing to show for it. If you own your home however, your monthly mortgage payments are similar to paying rent except they are going directly towards your own home: your own investment. Once you own your home outright, it’s a huge asset, especially in a city with such a high and competitive real estate market.

 Many people, if financially able, would choose owning a home as the money they put into accommodation goes directly into the property, their own investment. There are, however, considerations to take into account whether renting or owning. Depending on your lifestyle, owning may not be right for you even if you do have the cash for a down payment.

In this article, we’ll take a quick look at some of the pros and cons of owning versus renting.

Owning

Advantages to owning a home include:

    Owning a home gives you a sense of stability and of ownership. Many people grow up imagining they will one day own property. If you want to settle and start a family, owning a home can give you the stability to do so.

    Buying a house is likely the largest purchase you will ever make. While it takes time to pay off a mortgage, a home is a good investment, one which you can also keep in the family should you choose.

    If you own, you have more freedom when it comes to renovations and home improvements. No more dealing with potentially difficult landlords.

    There are certain tax deductions you can make as a homeowner, such as deductions on property tax and on interest paid.

Potential disadvantages include:

    You will have to spend more money. Even though your mortgage payments may be the same or less than paying rent, there are still considerable expenses, especially in the first few years of home ownership. This can include such expenses as utilities, insurance, and property tax. Make sure you fully understand the expenses before you buy. A mortgage broker can help advise you in that regard.

    Having a mortgage and owning a home is a big commitment, both financially and timewise. If you plan on moving around or travelling a lot, homeownership may not be right for you.

Renting

Advantages of renting property include:

    Renting can give you more flexibility. Usually after a year long lease, leases change to month-to-month which can give you the flexibility you need if you are unsure of your future living situation.

    As a renter, you will not have to pay for many repairs as those fall under the responsibility of the landlord.

    Rent is often cheaper than a mortgage, and you don’t pay property tax.

While disadvantages include:

    You must obey the landlord’s rules, which may, for instance, forbid pets.
    There are limitations on the appearance of the home and home decor.
    Zero return on your investment.

If you are considering making the move from renting to owning, consult a mortgage broker today. A mortgage broker can help you understand the market and assess your financial situation to help you determine if owning is right for you. Contact one of our mortgage professionals today to set up a consultation!

source: northwoodmortgage.com

Five Tips For Increasing Your Home’s Equity

Equity is the magic word when it comes to homeownership. There are equity mortgages and other products that you can tap into when you’ve increased the value of your home. However, equity doesn’t grow on trees, so here are five tips for increasing your home’s equity:

  1. Pay off the principal: The quicker you pay off the mortgage principal, the more equity you build up. Look into acquiring prepayment privileges from your lender. Or if the prepayment penalty isn’t that great, it may make sense to pay off your principal as quickly as you can even if you’re penalized because you’ll be that much closer to getting an equity mortgage (or similar product).

  2.  Hire an inspector: A certified home inspector will tell you how much your home is currently worth and what improvements are necessary to up its equity.

  3.  Make upgrades to the kitchen and bathrooms: Get rid of old tiling, upgrade your appliances, get a new showerhead – do whatever it takes to upgrade your bathrooms and kitchen. Moreover, if you have an unfinished basement, finish it. You can even add a basement apartment if there’s enough room to have a full bath, kitchenette, bedroom and living area.

  4.  Create more curb appeal: Curb appeal is how enticing your home is from the street. Ask yourself this: “When people drive by, do they stop and marvel at how beautiful my home is?” If the answer is no, then you have work to do. To create more curb appeal, make sure that your front door, roof, porch, windows – basically any area of the home that is visible from the street – is revamped or at least looks new. Manicure your lawn as well because overgrown hedges and grass can make a property look uninviting.

  5.  Clean your house: A clean house is an attractive house. Even if you’re not planning on selling your house, hiring professional cleaners to clean your home’s eavestroughs, windows and doors can increase its equity. Make sure everything gets a deep clean, from the light fixtures to the furnace to the garage door. Another bonus of cleaning your house is that you can declutter. Getting rid of old clothes and boxes from your attic or garage will not only create space, it will make moving easier when/if you do sell your home.

Once you’ve put money back into your home, you can take money out of it. Equity mortgages are available that use the amount of equity built up in your home to determine how much you can borrow. You can also refinance or take out a HELOC (home equity line of credit).

source: northwoodmortgage.com

Fixed Rate Mortgages: Should You Choose A 15-Year Or A 30-Year?

Once you’ve decided that you want a fixed rate over a variable rate mortgage, you then have to determine if you want 15 or 30 years. Taking on a loan for 15 years may seem impossible to some people, while others may think that’s just the right amount of time needed to pay it off. Generally, Canadians opt for anywhere from 25 to 30 years for their mortgages, but that doesn’t mean you have to too.

Fixed rate mortgages: 15 years

With 15-year fixed rate mortgages, you have the advantage of paying off the loan faster. Once you’ve paid off your mortgage, you can focus on putting money aside for other things like your retirement, children or grandchildren’s educations, vacations, etc. You’ll also save money on interest since you’ll pay more interest over 30 years than you will over 15. For example, 4% interest on a $200,000 home is $66,288 over the course of 15 years. The same amount of interest on the same property for 30 years is $143,739. Finally, with a 15-year loan you can build up the equity in your home quicker because you’re taking less time to pay off your loan.

Fixed rate mortgages: 30 years 

For fixed rate mortgages at 30 years, you’re looking at increased time to pay back your loan. You’re also looking at a lower monthly payment but, as aforementioned, more interest to pay over the 30 years. However, when you have lower monthly mortgage payments to make, you can save more money to put towards retirement, credit card payments, etc. With a 30-year mortgage you get to keep more cash in your pockets, but you will be putting less towards your mortgage. You can also make extra mortgage payments over the course of the 30 years to reduce the balance, but watch out for prepayment penalties.

Are the monthly payment amounts really that different?

With fixed rate mortgages at 15 years, you’d think that the monthly payments would be double those of 30 years. This isn’t usually the case. Let’s use the same example as before with the $200,000 mortgage at 4% interest. The 30-year monthly payments would be about $950. The same mortgage with the same interest at 15 years would see a monthly payment of about $1,450. That’s less than double with a difference in monthly payments of approximately $500.

Which one is right for you?

When it comes to choosing a 15- or 30-year fixed rate mortgage, you must evaluate your financial situation. Sit down with your mortgage broker and lay everything on the table. Your broker can help you make the decision as to which one is right for you by reviewing your financial situation and explaining in detail what your monthly payments will be, the interest and how you can manage a 15-year vs. a 30-year loan.

source: northwoodmortgage.com