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By Kevin M
 If you’re thinking of buying a new home in the near future, there’s something you need to think about first. Before you even sign a purchase offer to buy a new home, you first need to sell the one you have now.
During the brighter days of the real estate market—the 1980s, 1990s and even the early 2000s—people got very accustomed to the high degree of liquidity in the market. It was possible, and even common, for a buyer to schedule “back-to-back closings”—the closing on the new home and the closing on the old home, one right after the other. Often, both closings would happen in the same office. It doesn’t get any better than that right?
I saw a lot of this during my many years in the mortgage business; people often confidently bragged of their ability to sell their old homes in between the time of the contract signing and closing on the new one.
But a few things have changed since the good-old days. Engineering a simultaneous close in this market is an entirely different undertaking.
Continue reading Sell Your House BEFORE Buying a New One →
Guest Post
 If you’ve been looking into buying a home, condo or financing a home improvement project, you’ve probably come across a wealth of different mortgage loan options. But which is best suited to your needs and budget?
Here, we’ll discuss variable-rate mortgages (aka adjustable-rate) and fixed rate mortgages to help you establish a payment method you can feel secure with.
What’s The Difference Between Variable Rate and Fixed Rate Mortgages?
Variable rate and fixed rate mortgages sound complicated, but they’re really very simple. A variable rate mortgage means that the interest rate changes over time depending on changes in the market rate. With a fixed rate mortgage, the interest rate is locked in from the beginning and it never changes. Both types of mortgages have their ups and downs. Picking the right one depends on your ability to cover changing mortgage rates from one month to the next.
Continue reading Variable Rate Mortgage VS Fixed Rate Mortgage: Which Best Solution is Best for You? →
Guest Post
 The criteria for refinancing a mortgage through a traditional lender typically require some degree of equity in the property. At the very least, homeowners should not owe more than the home’s value in order to qualify for the best refinance rates.
After the housing market crashed in 2008-09, many homeowners found themselves struggling to refinance their mortgages in light of sinking home values and disappearing equity. However, there is hope for refinancing even for borrowers underwater with their current mortgage.
Home Affordable Refinance Program
Continue reading Refinancing With Declining Home Values →
By Kevin M
 For generations the conventional wisdom on housing was always to buy the most (or more) house that you can afford. The rationale—which worked for decades—was that a house was the closest thing to a guaranteed investment, and by buying the most expensive property you could afford you were insuring the greatest possible payoff over the long run.
That thinking caused many households to go deep into debt in order to make it happen, which created a vicious circle of greater debt feeding higher property prices.
What a difference a few years can make?
The entire conundrum went full circle, with property prices rising consistent with higher mortgage levels, until the borrowing party stopped. Suddenly John and Jane Q. Homeowner could afford to borrow no more, and the whole property construct has gone into the ditch.
Will we get out of that ditch anytime soon? Maybe…but maybe not, at least not for a long time.
Rather than speculating as to when the long awaited turnaround will occur, it might be better to plant our feet firmly in the ground that is now, accept our new reality and make adjustments in our housing expectations that are consistent with that reality.
Now is the time to reverse the psychology that drove both property prices and debt to dizzying levels and adopt a new strategy: buy LESS house than you can afford! Why?
Continue reading 5 Reasons to Buy LESS House Than You Can Afford →
Guest Post by Ed O’Brien
 A home mortgage loan is likely the biggest financial investment a consumer will make in a lifetime. Because the majority of mortgage payments will be stretched over a 15 or 30 year period, the actually cost of a home can be astronomical when interest charges are considered. Many new homeowners fail to truly realize that they bought a house for $130,000 and will spend nearly that much in interest charges over the life of the loan. For a $130,000 home, the consumer may spend well over $260,000 when all is said and done.
Since many people contemplating a home purchase may initially only look at the affordability of the monthly payment they are offered, consumers may not fully realize the advantages of doing all they can to get the best mortgage deal available. This includes cleaning up their credit significantly in order to save thousands or even tens of thousands of dollars over the life of a mortgage loan.
Why Credit Repair Matters to an Affordable Mortgage
Continue reading Want to Save Thousands on a Mortgage? Fix Your Credit →
By Kevin M
 Are people still taking adjustable rate mortgages, or ARMs? Apparently so. An article came out last week extolling the virtues of ARM loans, Home Loans: A Call to ARMs? The article states, among other things, that ARMs may be an “even better deal than fixed mortgages”, the spread between ARMs and fixed rates are the widest in eight years, and that ARMs are a good loan for people who “dead certain” they are going to sell within the fixed period of the loan.
Now, in the articles favor, there is a certain rate advantage in the short term. The article notes that the average rate on the 5/1 ARM—the primary loan in the discussion—is now 3.4%, compared to the average rate on a 30 year fixed rate loan of 4.72%. The 5/1 has a fixed rate period for the first five years of the loan, then adjusts each year there after, subject to a 2% annual cap, and a 5% lifetime cap—meaning the highest the rate could ever go over the life of the loan is 8.4% (OUCH!!!). But the article gives the example that on a $400,000 loan, you could save over $5,000 per year in interest.
Fair enough—but I still say balderdash!
And I can think of at least 7 Reasons why ARMs are a bad deal:
Continue reading Adjustable Rate Mortgages – You’re Kidding Right? →
By Kevin M
 I’m one of the rare examples of personal finance bloggers who see the 30 year mortgage as the better option than the 15 year loan for most homeowners. Yes, there are advantages to paying off your mortgage in half as much time, but you still have to deal with the effects of a higher house payment for 15 years, and that’s a long time when life is out there happening.
Before getting started, let’s use the following numbers as a point of reference for comparison:
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A mortgage amount of $200,000 for both a 30- and 15-year loan.
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As of today, the going rate on a 30 year fixed rate mortgage is around 4.50%, with a monthly payment of $1,013.
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The 15 year fixed is currently at about 3.75%, giving a monthly payment $1,454.
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The difference between the payments on the two terms is $441 per month.
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Over the course of a full year, the difference between the two loans is $5,292.
Why is the 30 year loan better than the 15?
Continue reading Five Reasons the 30 Year Mortgage Beats the 15 →
By Kevin M
What’s old is new again—there is risk in carrying a mortgage on your home! The foreclosure wave and forced short sales of the past few years have shown that paying down—and ultimately paying off—your mortgage isn’t just desirable, but perhaps even a completely necessary step toward securing you financial future.
The risk of not paying off your mortgage
The people who are in the biggest hole right now aren’t the ones who’s property values dropped so much as the ones where the value dropped below the amount of the mortgage securing the property.
Let’s say we have two neighbors, each owning a near identical home worth $200,000. Home Owner A has a $50,000 mortgage on his home, while Home Owner B owes $180,000. A recession hits, bringing a 25% drop in home values, and lowers the value of each home owners property to $150,000.
Continue reading Why Paying Down Your Mortgage is More Important Than Ever →
By Kevin M
Rates for fixed rate mortgages are below 4% for a 30 year loan, and down close to 3% for 15 year loans. So is now a good time to refinance? Maybe. And only maybe.
If you have an adjustable rate mortgage (ARM), a funky ALT-A, a variable home equity line of credit that can be consolidated, or most definitely a sub-prime deal, refinancing is a no-brainer. You’ll probably get better terms and a much better rate, so do it and don’t delay. No one ever needed a six month, interest-only ARM 3ith negative amortization in the first place!
It’s not all about rate!
Continue reading Is Now a Good Time to Refinance? →
By Kevin M
Two of the most important components of retirement planning are a generous retirement savings plan and a mortgage free home. But if limited resources force you to make a choice, which goal should get the lion’s share of your extra income?
There are three basic choices:
1) Emphasize retirement and let the mortgage slowly amortize itself into extinction
2) Throw all extra funds at the mortgage, and once it’s paid you’ll have even more money to put into retirement
3) A hybrid plan where you try to do both at the same time
This isn’t a good solution-bad solution debate. There are plusses and minuses no matter which way you go, and fortunately all three can get us where we need to go. Which one we choose will depend largely on individual circumstances and preferences.
Continue reading Save for Retirement Now or Payoff Your Mortgage First? →
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General: Any information in regard to money, credit, personal finance, or in regard to any other monetary topic, provided or shared on OutOfYourRut.com is presented for information and entertainment purposes only and does not constitute financial advice. It is intended to provide general information only and does not constitute personal financial advice in regard to your specific circumstances...MORE-->
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