Tara Patton's Blog

Make a list of any questions you have about the loan program. Be sure you understand the advantages and disadvantages of the various mortgage programs for which you may qualify, including the advantages and disadvantages of Fixed Rate Mortgages versus Adjustable Rate Mortgages. Decide if you want to lock-in or float the loan's interest rate. Locking-in the rate means that the lender commits to the mortgage interest rate for the loan - typically at the time the loan application is submitted. By floating the rate, you can lock-in the interest rate anytime between the loan application day and closing. Buyers opt to "float the loan" when they believe interest rates will drop after their loan application date and prior to closing. The risk is that rather than dropping, interest rates may rise, increasing the mortgage payment. Decide if you want to pay additional points to lower your interest rate. Typically you can elect to pay additional points (each point is 1 percent of the mortgage loan payable in cash at closing) to lower the interest rate of your mortgage loan. Gather your paperwork. See below.

Documentation Needed to Buy a Home

• Current Pay Stubs.

  Your last two pay stubs will suffice. Make copies and don't hand out your originals.

• W2s.

  This is your wage and tax statement, issued by your employer for a calendar year. It is what you attach to your tax returns. Lenders generally want the last two year's of W2s from both of you.

• Federal Tax Returns.

  If you haven't yet filed your tax return for last year, then find the two previous year's of tax returns. Make copies. Include all schedules. Tip: Make sure the tax returns are signed by you.

• Bank Statements.

  Some lenders want two months, while others will demand the last three months of bank statements. Make a copy from each lending institution. Include every page of each bank statement.

• Asset Statements.

  If you own stocks, bonds, mutual funds or retirement accounts, make a copy of each statement. Lenders prefer hard copies over those printed online but will accept online statements if that's how you receive your statements. Make copies.

There are two primary reasons to refinance a mortgage: to get more desirable rate and terms, or to extract cash from the home's equity.

Rate-and-term refinancing
Rate-and-term refinancing pays off one loan with the proceeds from the new loan, using the same property as collateral. This type of loan allows you to take advantage of lower interest rates or shorten the term of your mortgage to build equity faster. (Use this mortgage calculator to see how you can pay off your loan faster.)

Rate-and-term refinancing refers to myriad strategies, including switching from an ARM to a fixed or vice versa. For example, if you have an ARM that is set to adjust upward in a few months, you can refinance into a fixed-rate mortgage. Or if you have a fixed-rate loan and you know you'll move in two or three years, you could refinance into a lower-rate 3/1 hybrid ARM.

Cash-out refinancing
Cash-out refinancing leaves you with additional cash above the amount needed to pay off your existing mortgage, closing costs, points and any mortgage liens. You may use the additional cash for any purpose.

Source: Bankrate.com

Effective marketing is the key to selling your home quickly and getting the highest price. Aggressive, effective marketing of my Client's homes by every available medium is how I've become a top real estate agent in the Houston area. It's my job to assure that you get as many qualified offers as possible, allowing you to extract the highest price the market will bear.

One of the most important elements of marketing your home effectively is setting the price right. Set the price too high, and you won't get any offers and your home will take too long to sell. Set it too low and you cheat yourself by not getting your home's full, fair value. As an expert in Houston area real estate, I analyze the market and set area home prices every single day. I'll work closely with you to assure that everything possible is done to get the highest price, in the time frame you need.

The condition and appearance of your home are also critical factors in getting the best price for your home. I'll personally walk through your home with you and advise you of what you can do to properly stage your home most effectively. Some areas are much more important and more likely to pay off than others! Often, the buyer is motivated by emotional responses as much or more than financial issues. There are usually things I can point out to you that are easy and inexpensive, yet go a long way toward triggering those "buy" emotions.

As your agent, I'll negotiate furiously on your behalf throughout the entire process to ensure that your best interests are protected. Real estate negotiations and contracts can be intimidating in their complexity. Most people have almost no experience in these negotiations. After all, how often do you buy or sell a new house? As a top real estate professional, getting you the best terms and prices in all negotiations is simply part of my job.

Real estate appreciation refers to an increase in value of your home and the property. When your property "appreciates" you have greater equity against which to borrow, and you realize a greater profit when you sell. Property values fluctuate regularly for many different reasons, so how do you know the home you’re buying is going to appreciate over the years?

By and large, the economy is the driving factor of real estate appreciation in theU.S. That includes interest rates as well as the current employment rate, business growth in the area, housing supply and demand and affordability.

Regional economic and social factors also affect real estate appreciation. Many homebuyers choose to live in areas with the best and most convenient features for households to thrive, such as a close proximity to schools, jobs and commerce.

A good school district can also be an indicator of good home appreciation. It is believed that good schools help foster lifestyles associated with high levels of attainment at the individual, household and community level.

Demographics also play a role in real estate appreciation. For example, during the 1980s, much of the baby boomer generation (People born between 1946 - 1964) was buying real estate, causing homes to appreciate at a faster rate than inflation and made real estate a profitable investment. The group referred to as Generation Y – born roughly between 1980 and now – is the biggest generation since the baby boomers. Their contribution to real estate is expected to be far greater than their older siblings of Generation X (born between 1965 and 1979).

There are some aspects that significantly contribute to real estate appreciation, which you may want to ask your agent about when shopping for a home:

Recent sales. Ask your agent or retrieve public records on real estate sales in the neighborhood you wish to live in. How many home sales have there been in the past year? What are the asking prices? Do the final sales exceed the asking prices?

Appreciation history. Have home prices risen or declined over the past 5 to 10 years? Is the neighborhood considered desirable because of its location, amenities or affordability?

Local business economy. Is there a good mixture of business or does the area rely on one industry? Have any new industries moved into or out of the area? Is there a lot of new development nearby?Economic changes such as a large factory going out of business can dramatically affect demand for housing in a particular area.

It is important to note that while appreciation is nice to have, it should not be the reason you decide to buy a home in a particular area. Even if you buy a house in a rapidly appreciating area, there is no guarantee that its value will rise by the time you want to sell it. That’s why it’s best to pick a neighborhood – and a home – in an area that suits your own needs.

The same care and consideration you give to finding the right house should be applied to your search for the right mortgage lender. For most home-buyers a major determining factor in selecting a lender is the cost of the mortgage loan.

But how do you determine the cost of a mortgage loan?

Shopping for a Mortgage Loan

While most buyers concentrate on interest rates, it is best to look at all the costs associated with a mortgage loan. Mortgage loans include the quoted interest rate, points and closing costs.

More than Just Interest

A number of fees are associated with the mortgage loan, including:

• Appraisal - A carefully documented opinion of value by a licensed, professional appraiser.

• Credit Report - A detailed report of your credit, employment and residence history prepared by a credit bureau.

• Principal - The amount owed on a mortgage which does not include interest or other fees.

• Document Fees, Loan Fees and Processing Fees - Miscellaneous fees charged by the lender.

• Discount Points - Points paid in addition to the loan origination fee to get a lower interest rate. (1 point = 1 percent of loan amount)

• Origination Points - the total number of points paid by the borrower at closing. (1 point = 1 percent of loan amount)

• Interest Rate - A percentage of a loan or mortgage value that is paid to the lender as compensation for loaning funds.

Prepayment Penalty Mortgages (PPMs) These loans restrict your right to prepay part or all of the principal in the loan's early years. A prepayment fee is charged by the lender to the borrower who wishes to pay part or all of the loan ahead of the regular schedule. The advantage of a PPM is that they often have a lower interest rate than other mortgages.

Using the Annual Percentage Rate (APR) to Compare Mortgage Loans

The APR was designed to help borrowers understand the relative costs of a mortgage loan. The APR takes into account the various fees associated with the loan, which is why it is often higher than the interest rate. Understand that not all lenders calculate a loan's APR in the same way. That is why this should be only one of the factors used in selecting the best mortgage for you.

Locking-in Interest Rates

Another factor to consider when selecting a lender is whether the lender will lock-in the mortgage's interest rate and points. Click here to learn more about lock-in options.

Remember you can always go to www.roycemortgageofhouston.com for more mortgage information and to apply for a loan.