Which Is Better: Fixed Rate Mortgage Or Adjustable Rate Mortgage?
People often assume that because adjustable-rate mortgages “share risk” between mortgage lender and mortgage lendee, they will be rewarded with a lower mortgage rate than if they chose a comparable fixed-rate mortgage.
The chart at the left proves that thinking false.
Three separate times since mid-September, 5-year ARMs priced worse than a similar 30-year, fixed rate mortgage. It’s atypical, but it does happen from time to time.
And it’s also why locking mortgage rates is like running a Peyton Manning offense — you can’t call a play until you’ve stepped to the line and studied what’s on the other side of the ball.
Before settling on a specific mortgage plan, remember that mortgage markets change daily and mortgage rates change every 3 hours, 11 minutes. A 5-year ARM may look cheaper in the morning, but by the afternoon, it could be losing out to the 30-year fixed and — all things equal — it’s better to take that fixed-rate mortgage at a lower rate if it’s available.
Jeannette Neerpat
Helping You Find Your Way Home!
$8,000 Tax Credit News
The popular $8,000 tax credit for first-time home buyers. Originally scheduled to expire on November 30th, 2009, this valuable tax credit of up to 10% of the purchase price or up to $8,000 was extended into 2010 (purchase agreements must be signed by April 30, 2010, and closings must be final by June 30, 2010).
What people don’t know is that the new program was also expanded to include a tax credit of up to $6,500 (or up to 10% of the purchase price) for qualified buyers of a second or “replacement” home under the same deadlines. To qualify, home purchasers must have owned and occupied a primary residence for five consecutive years during the last eight years. Most importantly, the new program significantly increases previous income requirements.
So if you are a first time homebuyer or looking to upgrade your home by buying another one, the tax credit will apply. Give me a call to talk about what options you may have.
Jeannette Neerpat
Helping You Find Your Way Home!
Questions about FHA Guidelines
I was out with buyers this weekend and one of the homes they like had missing appilances. One of the questions they had is whether or not they would be able to put in an offer with this home considering it was missing them. I had been under the impression that you couldn’t purchase a home with an FHA loan without the appliances.
So I told them let me do a little research on it. And as it turns out I was wrong and I would be the first person to admit when I am wrong. So I decided to go ahead and post the answer here, just in case someone else had the same question.
Now I have decided to go ahead for the next few days to post some question and answers to some FHA guidelines.
Appliances: The Valuation Protocol (page D-26 of Appendix D, Handbook 4150.2) requires the appraiser to note the appliances that are present in the home at the time of inspection and whether the appliance is considered personal property or part of the real estate. The protocol further directs the appraiser to treat non-functioning appliances/equipment as deferred maintenance in the valuation process.
The manner in which an appliance is attached to the dwelling would determine whether or not an appliance should be considered part of the real estate. In some real estate markets, it may be typical and customary for certain appliances to convey with the real estate. In these situations, those appliances should be considered real estate and treated as such in the valuation of the property.
In some cases, such as that of REO properties, all or some of the appliances may be missing and there may be damage to the floor, wall or ceiling finish as a result of the removal. Depending upon the magnitude of the damage, the appraiser is expected to treat the damage to the home as deferred maintenance and reflect such in the conclusion of value. Missing appliances must be addressed by the appraiser in the valuation process, particularly when the comparable sales included a full complement of working appliances.
In cases where appliances are missing and minor repairs may also be needed, lenders are encouraged to have the borrower take advantage of the Streamlined 203(k) loan product, which has no minimum repair cost threshold and is designed to cover such improvements/replacements.
Jeannette Neerpat
Helping you Find Your Way Home!
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