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Things to Consider

house sitting on top of a piggy bank

Should you consider refinancing your mortgage?

If you've been a homeowner for a little while now, you may be asking yourself the all-important question, "Should I refinance my mortgage?"

People refinance their mortgages every day. Back when rates hovered between 3.5 percent and 4 percent, refinancing constituted a majority of the home loan application volume that took place each week, according to archived data maintained by the Mortgage Bankers Association. Lately, however, the refinancing portion of application activity has slid considerably, dipping below 40 percent.

You probably know the reason why: Rates have risen. Based on Freddie Mac data, 30-year fixed-rate mortgages averaged approximately 4.8 percent toward the end of 2018. That's up nearly a full percentage point from the final month of 2017.

Given this, you may be under the impression that refinancing your home loan doesn't make sense. However, even a fraction of a difference in your current interest rate can help you save potentially hundreds - if not thousands - off your mortgage over time.

Generally speaking, experts say refinancing is worthwhile when you can lower your rate by half a percentage point. As an example, perhaps your mortgage currently has an interest rate of 5 percent or thereabouts. By shopping around and running the numbers via a refinance calculator, a 4.5 percent rate can take off around $50 to $100 off what you spend each month in interest. The exact amount, of course, depends upon the terms of the loan. That kind of money really adds up over time so you can keep more of what you earn.

Having said all that, a lower interest rate isn't the only reason why it may make sense to refinance. Here are two other worthwhile justifications:

1) Your house is worth more

Homeownership is a smart investment, especially these days, as more homes are appreciating in value. According to recent quarterly figures from ATTOM Data Solutions, approximately 14.5 million properties are in positive equity. That accounts for roughly 1 in 4 homeowners who still have outstanding mortgage balances. Determining the value of your house is a bit more involved than positive equity data, but this gives you an idea.

As noted by Credit Karma, refinancing your mortgage with more equity available can provide added funds to pay off other expenses. This is made possible through cash-out refinance services, which work much like a home equity loan. You can then use the extra cash however you'd prefer.

2) You have a better credit score

Do you check your credit score? More specifically, do you check it often? Many people don't, unfortunately. You should get in the habit because the higher your score is, the better terms you get from lenders. You're entitled to a free credit report every year - one from all three credit bureaus. Once you get the information, reach out to your mortgage loan officer and run the numbers. You'll see what you may be able to save assuming your score is in better shape now.

Sure, rates may be slightly higher today compared to last year - but they're still quite low by historical standards. Your next step here is a simple one: Talk to your lender soon to determine if refinancing is ideal for you.

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Things to Consider

sun shining on a house

Will the sun shine on the housing market come spring?

With Groundhog Day fast approaching, America's favorite pint-sized meteorologist - Punxsutawney Phil - will soon emerge from his burrow to give the country his prediction: Will it be an early spring?

Don't get your hopes up too high. If history is any guide, it'll likely be another six weeks of winter. More often than not, Phil does see his shadow: 103 times since 1887, in fact, USA Today reported using National Oceanic and Atmospheric Association data.

That being said, there's still plenty to look forward to. In addition to the flowers blooming in spring, the housing market is expected to flourish as well - at least relatively speaking. Well, at least that's what the early signs suggest.

Home sales are down — for now

By most indications, such as those from the National Association of Realtors, buying activity decidedly cooled off down the stretch in 2018, with existing-home sales rising on a year-over-year basis just twice since the early summer.

With fewer people looking to move up or buy a house for the first time, builders have added time to develop residential properties. According to the National Association of Home Builders, a newly constructed single-family residence is move-in ready in approximately seven months.

Inventory is in slightly better shape

Housing supply remains below the ideal, with the number of unsold properties amounting to around 3.9 months, based on NAR's calculations. The optimal amount is approximately six months. However, conditions are better now than they were a year ago when total housing inventory in November equaled 1.74 million — up from 1.67 million at the same time a year earlier. 

With more dwellings to choose from, home value increases should stay relatively nominal, although the housing market does have a certain degree of uncertainty due to the effects of local dynamics. Still, NAR Chief Economist Lawrence Yun doesn't foresee any major price or sales swings, speaking at the REALTORS Conference & Expo in Boston this past November.

"The forecast for home sales will be very boring - meaning stable," Yun noted at the time.

Mortgage rates should remain historically low

Something else to be encouraged about is mortgage rates. Due to the Federal Reserve raising short-term interest rates four times in 2018, many suspected mortgage rates would rise sharply. That's not expected in spring, or throughout the year for that matter, explained Sam Khater, vice president and chief economist of housing research at Freddie Mac.

"Generally, the monthly mortgage payment remains affordable for most buyers and that's good news," Khater said. "First-time buyers account for over 45 percent of purchases and their share hardly has been impacted by the run-up in mortgage rates in 2018, which I think illustrates that they are a stabilizing force to the market because their willingness to purchase is high."

Although 30-year fixed rate mortgages did, on average, rise in 2018, the uptick wasn't major. But even if rates were to increase, they remain quite low by historical standards.

Much like Punxsutawney Phil, the housing market is unpredictable. But one thing is for sure: Residential real estate is healthy overall and poised to improve further along with the economy.


Things to Consider

Modern craftsman-style home

5 architectural styles to consider in your homebuying journey

What does your ideal home look like? Is it in a rural setting, or perhaps someplace more urban? Does it have a white picket fence or an underground one so your pets can roam free?

There's no right or wrong answer. But one thing you may not have considered regarding your next home is its architectural style. What kind of house do you envision buying for you and yours?

The building styles of residential properties nationwide run the gamut. Here are five of the more common ones today’s homebuyers typically purchase and what makes each so desired.

1. Craftsman

It's safe to say you've seen craftsman-style houses before, given that they're the most popular kind among Americans, favored by 43 percent of respondents in a recent Trulia survey. Craftsman properties trace back to the 19th century and were a product of the industrial revolution and the arts and crafts movement.

As noted by Marika Snider of the American Institute of Architects, these properties are epitomized by several common structural characteristics, such as stone and wood. In other words, they usually make use of natural elements as opposed to artificial siding, for example. This style is ideal if you like the rustic look, such as exposed beams in the interior or fireplaces.

2. Colonial

When you think of the picture-perfect home straight out of "Anne of Green Gables," colonial probably springs to mind. As the name implies, colonial-style homes came about in the 17th and 18th centuries, as settlers in the colonies adopted what they were used to in England and other parts of Europe.

Although there are several subcategories of colonial - such as Federal and Revival - they're known for architectural symmetry and proportionality. Shuttered windows are a common accompaniment as well, according to DIY Network.

3. Ranch

Unlike colonial, the ranch-style got its start in the United States, mainly in the West and Southwest, becoming particularly commonplace in the 1940s. As noted by Home Stratosphere, ranches are typically one-story and lengthier than they are tall. They're ideal if you prefer not to deal with stairs.

According to House Beautiful, ranch architectures also usually have low rooflines and U-shaped floor plans.

4. Cape Cod

Located in the easternmost section of Massachusetts, Cape Cod is one of the most popular vacation destinations in America, but it also is the birthplace of the eponymous architectural style.

Home Stratosphere noted that the early settlers adapted the style from Colonial Revival, mainly for protective purposes, as the dimensions were effective in minimizing the effects of stormy weather. Cape Cod style houses are generally thought of when describing New England charm.

5. Modern

Modern-style houses are the counter to the architectural styles of the early days. Instead of gable-style roofs, for example, modern home roofs are typically flat or have a slight slope to them, Snider told the Huffington Post. They're usually found in fairly upscale neighborhoods and the interiors feature clean lines and high-quality craftsmanship, such as hardwood flooring, marble or granite countertops and brick fireplaces.

These are just a handful of the house styles out there. Your real estate agent can help you decide what shape fits you and your family best and your loan officer can help you determine what you can afford.


Things to Consider

Woman's eye looking forward

What will the housing market be like in 2019?
With 2018 rapidly coming to a close, you may be wondering what the housing market will look like in 2019 - especially if you're considering a home purchase.

Real estate is a lot like the stock market: It's an outlet for investment, valuable and highly unpredictable. What's happening in one part of the country may be a different story in another.

But if there are any authorities qualified to make some educated guesses on the subject, it's Freddie Mac and the National Association of Realtors.

Here's what these two esteemed organizations have to say about what lies ahead for the housing market in 2019.

Homebuying to pull back in 2019

For the most part, residential real estate purchases are forecast to continue where they left off in 2018 by further evening out. That's according to NAR Chief Economist Lawrence Yun, who recently spoke at the 2018 Realtors Conference & Expo held in Boston. Yet despite the slowdown in buying, asking values will most likely continue their steady ascent.

"Ninety percent of markets are experiencing price gains while very few are experiencing consistent price declines," Yun explained. "2017 was the best year for home sales in 10 years, and 2018 is only down 1.5 percent year to date.

Yun further stated that, much like this passing year, the dip in homebuying activity will likely be rather temperate, as opposed to dramatic.

Making a similar prognosis about how things will shake out in 2019 is Sam Khater, chief economist at mortgage giant Freddie Mac. However, he's more inclined to believe that activity will pick up in intensity as the year progresses, particularly among millennials.

"While we expect the weakness in housing activity to extend the next few months as the market absorbs the recent uptick in mortgage rates, the combination of strong economic growth and millennials moving toward homeownership should help home sales regain momentum and rise modestly in 2019," Khater said.

Will mortgage rates rise or fall next year?

Among the biggest unknowns in the housing market are mortgage rates, given they fluctuate virtually every day. In early December - the most recent data available - 30-year fixed-rate mortgages averaged 4.75 percent, down from the previous seven-day period (4.81 percent) but up compared to this time last year (3.94 percent).

What direction are they headed in 2019? Freddie Mac - along with most other housing authorities - suspect rates will continue to move higher, perhaps surpassing 5 percent.

Should rates indeed rise, it's important to stress that they're still rather low in comparison to previous years. As recently as October 2008, 30-year FRMs were above 6 percent, based on archived Freddie Mac data. And in the late autumn of 1990, long-term FRMs averaged approximately 10 percent.

In other words, in terms of borrowing money, interest rates remain very affordable and are expected to stay that way for the foreseeable future.

As for how much the typical single-family house will sell for in 2019, Yun predicted the median will reach $266,800. That's a 3 percent increase from 2018, but below the $274,000 anticipated in 2020. In short, "home price appreciation will slow down … but prices will continue to rise," Yun said.

All real estate is local, so while these predictions on the housing market are informed opinions, the best source to go to on the housing climate in your area is your trusted Loan Officer. They should be able to give you a more nuanced picture of what conditions will be like in 2019.


Things to Consider

Family enjoying breakfast on the deck at their beach house

What to consider when buying a beach house

Imagine waking up with the sun glimmering through your bay windows on an early summer morning. The bright light reflects off the ocean below as seagulls chirp and gentle waves crash. The warm temperatures and gorgeous scenery make breakfast on the deck a delicious way to start the day.

Sounds heavenly, right? The benefits of buying a beach house are as plain as day, but before you take the plunge, it's important to evaluate the whole picture from a cost, maintenance and potential loss perspective.

Here are four main factors to consider before purchasing a beach house:

Beach houseThey're usually top dollar

There aren't many beachfront properties from which to choose. This fact alone makes them pricey. Beachfront properties cost significantly more than the typical house, even when they're considerably smaller in square footage and boast fewer attractive interior features.  

Rental income not a sure thing

Perhaps you're looking to buy a beach house as a second home and to rent it out when it's not in use. This can make a lot of sense and defray some of the costs associated with taking out a first or second mortgage. But as real estate expert Kay Walten explained to Realtor.com, banking on renters could be a recipe for disaster if the market turns sour.

"We see people look at their dream place on the sand ... and they're confident they can keep it 'full' only to realize they can't," Walten explained.

In short, rental income isn't a guarantee, so you should have a plan B that you can turn to if plan A doesn't pan out during rental season.

Maintenance is often demanding

Keeping up with repairs is an ongoing chore, no matter where you live. However, it's particularly demanding as the owner of a beach house, with damage caused by erosion, heavy wind gusts and pounding surf. Plus, there's an increased risk of experiencing the ill effects of hurricanes along the Atlantic and Gulf of Mexico.

According to a report from CoreLogic, nearly 7 million homes are in the crosshairs of storm surge emanating from hurricane activity, with reconstruction costs topping $1.6 trillion. Perhaps unsurprisingly, property owners in Texas, Louisiana and Florida are the most susceptible to hurricane storm surge damage than any other.

High home insurance rates

Given they're more likely to be impacted by weather-related catastrophes, home insurance premiums tend to be more expensive than inland properties. Depending on where you buy, you may be required to obtain certain policies, such as flood insurance.

Scared away? That's not the intent. A beachfront property can be heaven on Earth. But it's also important to enter into beachfront ownership with your eyes open and backup plans in place for those days when it isn't all sunshine and blue skies. If you want to take a realistic look at the numbers, get your mortgage Loan Officer on the phone and have a quick strategy talk.

With a little planning and preparation, that sunlit breakfast on the deck could be your reality.


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