The KCM Blog (Keeping Current Matters…building a home for real estate information) has posted financial tips advice on refinancing in today’s low mortgage rate environment: To Refi Or Not To Refi….THAT Is the Question . Read the entire article at this link and Buzz is providing a few snippet paragraphs below:
“Holy Cow! Have you taken a look at where interest rates are these days??? There are Ten Year Mortgages in the 3.75% range for heaven’s sake! Yes, 3.75%!!! What are some of the issues to consider as you (and all of America) contemplates a refinance?”
1. Does it make financial sense?
If you are considering a “rate/payment reduction” refinance, I typically recommend that people do one simple calculation.
2. What about a refinance to shorten the term of a mortgage?
When examining the possibility of cutting years off your mortgage, you should take a good hard look at how such a move can affect your monthly cash flow.
3. What will my home appraise for?
This is the biggest challenge facing most people. With so many homes underwater, there are many people who won’t be able to refinance.
4. Should I lock in?
Even though conventional wisdom is that rates are likely to stay low for a while, history has shown that when they do go up, they go up quickly and dramatically; therefore, my advice is that if you like the rate you are quoted, lock it and sleep well.
5. How will my income and credit be looked at?
Your refinance creates a new loan that will likely be bundled and sold in a new mortgage-backed security; therefore, this new loan will be underwritten to today’s guidelines (which are tighter than they were a few years back).
The most important thing is to speak with a solid mortgage professional and try to address any hurdles BEFORE you spend your money. Compare the proposed savings; honestly assess your home’s value; review your income, assets and credit; all ahead of time to improve the likelihood of a desired outcome.”
“A real estate appraisal is an estimation of market value. Lenders usually require appraisals for homes on which they are asked to lend money in the form of a mortgage or home equity loan. Appraisals are performed by trained professionals who are licensed by the state in which they operate. The appraiser may be hired by you or by the lender, but is an impartial third-party who provides an objective analysis of the property’s value.
An assessment, on the other hand, is conducted by a municipality when evaluating properties for the purpose of levying property taxes. Municipalities look at the overall value of properties in an area and the specific use of a particular property. For example, commercial properties like professional offices are assessed at a different rate, even though they may be in buildings that are just like homes in the same area. Property tax may also vary depending on the last date the property changed hands. Today, computer technology streamlines the process of assessment and allows for sophisticated statistical models. Many states offer homeowner’s exemptions, which reduce the assessed value of a property when it is the owner’s primary residence.
Municipalities typically send assessment notices yearly in advance of the issuance of property tax bills for the year. A provision is made for an appeals process if the property owner does not feel that the assessment is correct.
In a stable real estate market, appraisal and assessment values may be similar, but never make the assumption that if you have one that you know the other. Market fluctuations, lag time from assessment to notification, and recent renovations or improvements may cause a disparity between the two numbers.”
The Baton Rouge Business Report Daily PM Report is report a Capital Region home sales plunge of 21% in July 2010. “The number of homes sold in metro Baton Rouge fell by 21% in July compared with the year before, as the market corrected itself after being bolstered by the federal homebuyer tax credit. There were 523 homes in the Capital Region sold in July, compared with 665 sales in July 2009, according to figures from the Greater Baton Rouge Association of Realtors Multiple Listing Service. An $8,000 tax credit for homebuyers expired earlier this year, and transactions had to be under contract at the end of April to qualify for the money. That led to Capital Region home sales posting 21% and 28% increases in April and May over last year. The average sale price in July was $197,076, down from the $203,735 average in July 2009. Sales were down nearly 31% in Ascension Parish in July, from 111 in 2009 to 77. Livingston Parish saw a 25% drop, from 114 homes changing hands to 85. In East Baton Rouge, there was a 24% drop in home sales, from 414 to 313. The other category, which includes MLS sales in West Baton Rouge, Iberville and the Feliciana parishes, actually saw an 85% increase, from 26 to 48. Through the first seven months of the year, home sales continued to run slightly ahead of the 2009 pace. There were 4,107 homes sold through the end of July, up 3% from the 3,985 sales total at the end of July 2009.”
http://www.batonrougerealestatebuzz.com/ – Baton Rouge Real Estate: To Refi Or Not To Refi. THAT Is the Question In September 2010
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http://www.batonrougerealestatebuzz.com/