Tag - mortgage

The Cost of Waiting

Interest rates have been at historically low levels this year due to the COVID19 pandemic. Many people have taken advantage of these great rates by purchasing a bigger or more expensive home with the same or more affordable payment. And even more people have taken advantage by refinancing their loan into a great low rate. However, even with rates at extremely low levels there are still many people wondering if it's a good idea to wait and see if rates get better before purchasing a home or refinancing. One thing that is not often considered when it comes to playing the waiting game with interest rates is the amount of money you could be saving while you wait for interest rates to lower.  Even if rates do improve in the future, the money that could be saved during the waiting period may be significant. A few hundred dollars saved per month could add up to potentially thousands before a lower rate opportunity arises. The forecasted appreciation is 2.0% in just the next  months. This means a home worth $350,000 today would be worth $7,000 more in 6 months. If you are playing the waiting game you are missing out on the potential appreciation and ammonization of your home. It could take many, many years to recoup the money you have lost. While it is true that we don’t know if rates are going to go lower, we do know that they will eventually go higher. Why risk the chance of missing out on a great low rate and savings each month?  It could take a long time for the savings of a lower rate in the future to make up for all the money that was lost by waiting for interest rates to lower again.  And remember, there's no guarantee that rates will go lower. Besides should rates drop significantly, we can always refinance you in the future. It's important to weigh the individual options for your situation and I'm here to help you do that. If you have any questions on a home purchase or refinance give me a call, 801.206.4343. I would love to answer any questions you have and discuss the best option for your specific situation.
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Bidding Over Asking Price: Is paying over asking price okay?

First of all, I fully support it if it's a house within my own neighborhood. :) Joking aside, the real answer depends on the situation. How long do you plan on staying in the home, how many other offers are you competing against, what is the real value of the house, etc. So, when is it ok or not ok to overpay for a house? In today’s world of low inventory, buyers are finding it harder and harder to get a house. Most houses are selling within hours of hitting the market with multiple offers and for over asking price. It can be gut wrenching writing an offer for $315,000 when the house is only listed for $300,000. It would be like going to the Cadillac Dealership and looking at a car with a sticker price of $30,000 and telling the sales person, I know this car is for sale for $30,000 but I would like to pay you $35,000… What kind of crazy person would do that? Sometimes what a house is listed for isn’t always what the house is worth. Joe Reardon, with Keller Williams says, “Writing an offer over asking can be ok, provided you are working with a good real estate agent who can look at prices and help you make a reasonable, value based decision. For instance, we are currently working with a buyer on a home with a list price of $600,000. We ended up going under contract at $651,000. From looking at the comps we felt the home was under valued at $600,000. The appraisal actually came in at $655,000! Having somebody who can interpret the data matters.” In some cases, we have even seen a strategy where listing agents are under listing the house to garner more attention and instigate a bidding war to raise the price. Another thing to consider is what is the real value of an object or a house? The value is what someone is willing to pay, and not necessarily what the seller is asking. One of my clients wrote an offer last week on a town-home. There was a total of 24 offers made on this town-home, all of the offers came in higher than the list price. If there are 24 other people willing to pay more for the town-home, is the value the list price? Being a buyer in today’s market is difficult. To me, it feels like a war zone. It can be tough writing offer after offer and not getting accepted. Some of my clients have felt so discouraged they told their agent “write the offer for whatever you have to do to get us under contract. If the appraisal comes in lower, we will just try to negotiate later.” We have seen other situations where the buyers are waiving the appraisal contingency altogether and agreeing to buy the house no matter what the appraisal comes in at. Let’s look at it from a different perspective. Maybe, it is not overpaying for a house, but future paying. Here is a real example for one of my clients. She fell in love with a house in Riverton listed at $450,000. We did the research and learned the seller paid $280,000 for this house in 2013. This house has appreciated $170,000 in the last 7 years! This seems like a crazy amount, but it is actually only 8.6% per year. Let’s pretend you were the client and really loved this house. Knowing that there are multiple offers, how much is ok to overpay, or future pay for this house? See the chart below. If we were to bid $9,000 over asking price the value should exceed the bid over, ask in January of 2021 which is only 5 months away. This is based on an average of 4.3% appreciation. With this rate the house is forecasted to appreciate $93,000 over the next 5 years. Let’s also not forget that terms are just as important as price. It is often not the price of the house that is most important, but the price of the monthly payment. With today’s record low interest rates, you can lock in 30-year fixed rate below 3%. Justin Udy with Century 21 Real Estate says, “It makes sense for a buyer to pay over asking if the home is of more value to the buyer than the asking price. The list price and perceived price are two different things. Ex. It may be in the exact school district they want, walking distance to work, same neighborhood as family, have all the amenities they want, the condition and quality surpasses the competition, etc... In the end, real estate is the price where a buyer and seller meet. Asking price is a request or suggested price not necessarily the value of the home.” While it still feels crazy to me to walk into a Cadillac Dealership and offer $35,000 for a $30,000 Car maybe it’s not so bad if it’s the exact car I want, there are no other Cadillac’s available for sale, and there is a line of people out the door all wanting to buy the same car. In today’s market you may have no other choice then to make an offer above list price, but I do not think that should deter you from buying now. Even in today’s market I still believe wholeheartedly in one of my favorite quotes, “Don’t wait to buy real estate. Buy real estate and wait.
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Refinance Fee Pushed to December

On August 12th Fannie Mae and Freddie Mac made an announcement for a new adverse market refinance fee set to go into effect for loans delivered after September 1st. The fee is “supposed to” help supplement the projected losses both Fannie Mae and Freddie Mac are anticipating experiencing this year due to the current economic uncertainty from COVID19. The fee would be a 0.5% hit to pricing of the loan amount that will be applied to all refinances. This is the equivalent to a $2,000 increase in closing costs on a $400,000 loan, or an interest rate increase of approximately 0.125% to 0.25%. Those of us in the mortgage industry were surprised and upset to find this hit was added over night and affected a lot of loans already in process in August. Rates that we had already locked were now going to have a 0.5% hit. As a company we decided to not pass this along to our clients and were going to bear the cost with no additional charges to those already in process. The mortgage industry was in an uproar over the surprising announcement and decided to call on the Federal Housing Finance Agency (FHFA) to reverse the decision. Our lobbying efforts were partially successful. The FHFA announced that they advised Fannie Mae and Freddie Mac to postpone the refinance tax going into effect until December 1st. The delay was to give sufficient notice of the new fee to lenders and borrowers. Both enterprises agreed to postpone in order to not impact loans right away. My personal opinion is that this was an orchestrated move. If they would have announced that this fee would start in December everybody would be upset. But if they announce it starts in September, then postpone it until December, everybody is happy about it. Refinances make up 2/3 of all mortgage transactions so this fee is a huge win for Fannie and Freddie because it will mean an enormous amount of money back in their pockets. Not only is this new fee a conspiracy for more money, it also could not have come at a worse time as we are in the middle of a pandemic and trying to come out of recession. With the new fee set to hit refinances delivered after December 1st. Keep in mind that this fee is based on the delivery date to Fannie Mae. Loans that close in the 2nd half of November will be delivered in December. We will begin to see it affect refinance transactions that start in October. I highly recommend locking in your refinance in September or first part of October before lenders add back this 0.5% fee to the rate sheets. For those of you waiting for a rate drop it’s a true that we don’t know if rates are going to go lower, but it is a fact that when this fee is added back in refinance rates will go higher by about 0.125% to 0.25%. When you combine this hit with the risk that the election could cause interest rates to go higher I believe it is best to jump on this opportunity now before you have to incur the new fee on top of a potentially higher interest rate. If you have been thinking about refinancing now is the time! Give ALV Mortgage a call today and let’s get started on running the numbers for your loan so we can lock in your interest rate before the fee goes into effect this fall.
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10 Ways to Avoid Boredom This Summer!

Summer is in and kids are out - of school, that is. After the summer camps, the family trips and the holidays, a lot of parents are left wondering what activities they can use to keep the kids busy and get them out of the house. With triple digit weather just around the corner, we know you are looking for simple, cool and entertaining ideas for the kiddos this year. Beside perhaps letting the kids frolic in the yard, what's a parent to do? Fear not! We've compiled a list of 10 fun summer activities for you, all within the Salt Lake Area. Get your planning in gear today!
  1. Red Butte Garden Outdoor Concert Series - Located on the upper east side of campus, the Red Butte Garden will be hosting some amazing musical talent this summer such as Sugar Ray, Steve Miller Band, and a host of well-known artists.
  2. Hit the biking/hiking trails - Some of the best biking trails are also some of the best trails for a great hike. There are trails just east of the U of U campus; you might also consider nearby canyons such as City Creek Canyon and Millcreek Canyon.
  3. The Utah Arts Festival - The Arts Festival will be held at the downtown Library Square from June 25 - June 28. See more info on their Facebook page by clicking here.
  4. Fireworks at the park (twice in the same month) - One of the benefits of living in Utah is that we have two July holidays with fireworks—the 4th of July and the 24th of July (Pioneer Day). Why not take advantage of both days?
  5. Go to the pool or water park - You can go to a local pool or you can try out Seven Peaks Waterpark (formerly called Raging Waters) at 1200 West and 1700 South.
  6. Twilight Concert Series at Pioneer Park - Join gatherings of outdoor concertgoers for some of the hottest shows in town, such as Death Cab for Cutie. Tickets are only $5 in advance and $10 at the door.
  7. Drive-In Movie Theater - Pack up a cooler with your favorite beverages and snacks, along with some blankets and beach chairs, and you’re good for a relaxing time with two great flicks for a low price. Click here for more information.
  8. Hogle Zoo - Not only are there dozens and dozens of exhibits for kids to bounce back and forth between, there are also great clubs, camps, Harry Potter themed zoology classes and sunrise/sunset safaris where no kids from 1 - 92 will be able to find anything to be bored about.
  9. Boondocks Fun Center - Tuesdays will never be boring again when you can get unlimited Laser Tag, XD Theater, Kiddie Cove and video games all for $12 at Boondocks. For an extra $8 per person, you can buy an Outdoor Upgrade with Go-Karts, Batting Cages and more. Military discounts apply.
  10. Wheeler Historic Farm - This is a working farm with a museum and a great amount of open space for kids to run around. Picnic facilities and a playground make for a good afternoon escape, and wagon and train rides give a very nostalgic feeling to the whole experience. Did we mention it's a public park, so it's free?
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Mortgage Insurance : A Breakdown

What is Mortgage Insurance? Mortgage insurance is a specialized protection for the lender -not the buyer- if you are unable to make your mortgage payments, for any reason. If you fall behind, your credit score may suffer, and you could stand to foreclose on your home. How does it work? Mortgage insurance lowers the risk to the lender making the loan to you, that way you are eligible for a loan you might not otherwise get. This does increase the cost of the overall loan but if you are required to get it, it will either be included in your monthly payment, your costs at closing, or both. Who needs Mortgage Insurance? Typically, borrowers making a down payment of less than 20 % of the purchase price of the home also will need to pay for mortgage insurance. This insurance is also usually required on FHA and USDA loans. Are there different ways to pay for Mortgage Insurance? There are several different kinds of loans available to borrowers who have low down payments, and the resulting mortgage insurance can be paid for in a number of ways:
  • Conventional Loans - your lender may arrange for a private company to insure you. Private mortgage insurance (PMI) rates vary by the amount of the down payment amount and credit score, but are tend to be cheaper than FHA rates for good credit. Under certain circumstances, you may be able to cancel your PMI. (see last question)
  • FHA Loans - premiums from your insurance are paid to the Federal Housing Administration (FHA). This insurance is required on all FHA loans. FHA insurance is paid by both monthly payments and upfront costs included in closing. Loan amounts can increase if there is not enough cash on hand to pay upfront and the fee is rolled over to the mortgage.
  •  USDA Loans -  Similar to the FHA but typically cheaper. You will pay for insurance both upfront and monthly. You may choose to roll the upfront portion to the mortgage but again, this will increase overall loan cost.
  • VA Backed Loans - replaces mortgage insurance and functions similarly to it. There is no monthly premium with this loan but there is an upfront “funding fee”, which varies depending on the type of military service, the down payment amount, disability status, type of loan (buying or refinancing), and whether or not it is a first VA loan. You have the choice to roll the upfront fee with this as well.
Can you get rid of mortgage insurance? In order to remove private mortgage insurance (PMI), you must have at least 20% equity in your home. You may ask the lender to cancel PMI when you have paid down the mortgage balance to 80% of the home’s original appraised value. When the balance drops below 78%, the mortgage servicer is required to eliminate the PMI.
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Five Signs You Are Ready to Buy a New Home

Have you been asking yourself if it might be time to fulfill the American dream of home ownership? There are many factors to consider before making this decision — beyond low interest rates and competitive pricing. Here are five signs which might indicate that the time is finally right for you: 1. Debt Elimination Being able to conquer outstanding car payments and credit card debt means you won’t have as many extra bills, which could diminish your available funds to be able to support a mortgage. The increased cash flow (which is now not going toward debt) gives the opportunity to make sure other homeowner related expenses can be covered, such as property tax, homeowners’ insurance, repairs, maintenance, furnishings, etc. 2. Job Security While any job always comes with the possibility of uncertainty, the longer you are in a position or have obtained enough years as a business owner, the more likely that your job will be viewed as sustainable enough to back up home ownership. 3. Income Increase No more than 30 percent of your total monthly income should be going toward a mortgage payment. However, you are able to put as much as 50 percent toward the mortgage payment, if you know you are able to live within your means until a raise comes your way. Earning more means you won’t have to put as high of a percentage of your earnings toward your house payment. Otherwise, lack of extra income could put you at risk for financial vulnerability. 4. A Solid Savings/Emergency Fund Acquiring a new home can mean many potential surprises. In general, something unexpected will always come up in life as well. It is logical and vital to minimize stress and prepare in advance with extra accounts, including a savings account and emergency fund. After all, having to rely solely on a monthly income to cover unexpected costs (since monthly income has already been calculated and is needed for the mortgage and other bills) can create avoidable issues. By having funds set aside in the amount of an equivalent of at least a year of monthly bills — is a good position to be in before considering a big move. Setting and sticking to a firm goal is the only way to attain this level of security for your household. 5. Higher Credit Score After paying off debt and monitoring your credit report, you are able to increase your credit score to obtain a more ideal interest rate. Qualifying for a better interest rate means you get to enjoy a lower monthly mortgage payment, making the option to become a homeowner an obtainable goal.   These are just some of the signs that you can use to determine whether or not you are ready for the home-buying process. Our friendly and knowledgeable staff is happy to answer any questions or concerns you might have. Please contact us if you feel you are ready to pave the road to your new home!
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“Shining Star in Our Home Purchase Process”

Anthony with ALV Mortgage was a fantastic broker to work with! He was the shining star in our home purchase process. We are first time home buyers. Anthony not only worked with me to make sure I know what the process was supposed to look like, but he also worked to ensure that the process happened quickly and smoothly. Interest rates went up during the process, but Anthony worked his magic and was able to get us the rate we were after! Our loan processor (Rhoda) was incredibly professional and quick on the phone. We had a couple calls and sent several emails along the way with updates. I would recommend Anthony and ALV Mortgage to everyone! He was able to beat Rocket Mortgage's rates and fees, and was much quicker! Jeffrey Green - Salt Lake City  
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“She Works Hard for the Money”

As the Donna Summer’s song goes, “She works hard for the money.” We want to help you put that money to work for you by exploring the advantages of a cash out refinance on your home. A cash-out refinance may be the key for opening financial doors for you and your family. We have assisted hundreds of clients in putting their equity to work in many ways, including:  
  • Eliminating high interest rate credit cards
  • Finishing a basement, remodeling their home, etc
  • Starting a business without seeking outside lenders and investors
  • Diversifying their investments into such things as stocks, rental properties, etc.
  • Helping with unexpected or major expenses such as medical and education needs
  • Pulling cash out for the purchase of a new primary residence
  I recently closed a loan for a family who had gotten in trouble with their credit cards. The husband had gone on a little shopping spree and neglected to tell his wife that he had opened a few credit cards without her knowledge. Upon the loan application, imagine her shock learning that there was more debt than what she was aware of! This family was in a FHA loan and paying high FHA Mortgage Insurance. Their home had appreciated an astounding $100,000 in the 5 years they had lived here. We decided to complete a cash out refinance and ended up helping them pay off $32,000 in credit cards. We refinanced into a Conventional Loan and removed the FHA Mortgage Insurance. Because we did raise the loan amount, their monthly payment increased, but only by an additional $172 per month. By paying off the $32,000 in credit cards, they saved $1,238 per month in credit card payments. This cash out refinance gave them the freedom they sought by alleviating the heavy debt burden they had been carrying. A family who owned a three-bedroom home with an unfinished basement initially bought the home with two kids, which fit them perfectly. After having their family grow by an additional two kids, they had become completely crammed. We completed a $24,000 cash out refinance, which afforded them the ability to finish their basement, as well as add two additional bedrooms, a bathroom, and a TV room for the kids to do exactly as they pleased with plenty of space to run around. One of our clients, who is a mechanic, had worked for years at large dealerships fixing cars. He decided he was ready to work for himself, so he came to us to complete a cash out refinance for $40,000, which gave him enough to open his dream garage, as well as purchase the lifts and other equipment he needed to be independent. He now works longer hours for himself than before at the dealership, but he followed through with his vision of owning his own business successfully because of his decision to refinance! A client of ours, for whom we did a cash out refinance four months ago, took $120,000 in cash out of his house. He felt that the equity in his home was not working hard enough for him and decided to turn it around by investing. He immediately bought a condo for an investment property and as a result, is now cash flowing $350 per month. He kept half of his cash and is actively looking for another investment property to buy. He is seeking to turn his equity into about $700 in monthly cashflow with additional property, made possible by the services we were able to provide. In 2012, a couple came to us seeking to cash out $50,000 to fund in vitro fertilization treatments and other expenses incurred while trying to expand their family. Having no kids of my own then, I thought they were nuts! I have been blessed not to be in a similar position, but now that I have two children myself, I understand why this was such an important step for them. They have expanded to a happy, healthy family with three children (including a set of twins.) I have been able to stay in touch with them through social media and their decision to refinance is one they would not go back on. They put their equity to work for something that not only helped their future, but assisted with their goals of having a loving family of their very own. In the last 12 months, we have noticed what has become an exponentially growing trend. Many of my clients have sought to purchase a new home by using their equity, keeping their home, while converting it into a rental property as a means of providing future retirement income. This works by pulling the cash out of their current house, then using that as a down payment toward their next purchase. There is only one move here, which eliminates stress about selling their house and trying to buy a new one simultaneously. They utitlize the existing equity to work for the purpose of providing for themselves looking toward the future.. Owning your own home is not just a fundamental aspect of the American Dream. For many American households, the equity in their homes represents as much as 67 percent of their total net worth. For generations, the power of home ownership has created a solid financial base for millions of families, and a little knowledge offers the potential for even more financial independence. We can assist you with the knowledge and expertise to help you not only envision a possible dream, but live it by ensuring money doesn’t stand between you and your lofty goals. You work hard for your money, and we are here to treat you right!    
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