Money Saving Tips for Home Sellers

Long Term

When home owners take on a mortgage, they agree to a long term commitment. Home buyers should seek out the best professional advice to help them in arranging their mortgage.

Amortization

Mortgages will amortize over a specific period of time. The usual length of a mortgage is 30 years but amortization can be as short as 15 years. On the other hand, mortgages can run longer than 30 years under certain circumstances.

Differences

Mortgages are not all the same. They differ in loan amount, terms, interest rate, and monthly payments. A mortgage must suit individual needs and finances.

Risks

Lenders assess the risk of granting a mortgage to a home owner. Before applying for a mortgage, individuals should try to be in the best possible financial condition. They should work to get their credit rating to the most favorable level. Lenders will reward a good credit rating with a low interest rate.

Market

Just like shopping for any major purchase, people should look for the best deal with their mortgage. Shop around for the lowest interest rate. If all lenders offer the same rate, they might still offer different terms and conditions.

Questions

Borrowers should ask lenders about the mortgage process. Home buyers must be as informed as possible about the steps in getting and managing a mortgage.

Pre-Approval

Pre-approval makes for an easier process down the line. Yet home buyers should not get overenthusiastic about pre-approvals. An individual might be able to get a substantial loan but that does not mean that it is a wise decision to pursue an exorbitant amount.

Down Payment

Generally, lenders require a down payment. The deposit is seen as a portion of the value of the property. If home buyers make a 30% down payment, they have a loan-value ratio of 70%.

Constant Terms

Lenders will offer constant terms to borrowers for a set time – usually ranging anywhere from six months to five years. During this period, interest rates and payments will remain constant despite market fluctuations.

Variable Rate

If a home buyer expects a drop in rates, a variable rate mortgage is a sensible choice. The interest rate will fluctuate according to the market rate.

Payments

Home buyers must be realistic about what they can afford to pay per month. Although a mortgage payment is high priority, so are food, utilities, transportation to work and school, and other basic expenses. The monthly payment should account for only 30% of the gross combined family income.

Rounding Up

Borrowers can ask lenders to round up their mortgage payment - for example, from $141.52 to $160. That $18.48 difference per month might not seem like a big deal but it can add up to thousands over amortization of the mortgage.

Skipping

Skipping a mortgage payment is not a good idea. That action adds to the interest on the outstanding balance. 'Skipping' increases interest costs on the life of the mortgage.

Mortgage Basics

What Question Would You Ask Your Lender About Mortgages?

Minimalism is experiencing a mini-boom – actually, more than that, a full-scale trend - in modern décor. One school of thought is that the increasing popularity of minimalism is tied to the downturn in the economy. Some think that if people can afford less stuff, minimalism might work in their favor.

MISCONCEPTION

Yet some people have a misconception about minimalism. Many believe that you cannot display any of your beloved possessions with minimalism. You can, however, easily show off precious plants or have your favourite lighting touches and still have a minimalist home.

Minimalist style does not have to mean cold and stark design. A minimalist room can reflect a soft, liveable style. Indeed, a minimalist space does not have to be just about the contrast of black and white. Minimalism can include any shade in the spectrum.

NOT JUST BLACK AND WHITE

Traditionally, the minimalist look was all about black and white. Yet modern minimalism can introduce extra elements without sacrificing the clean lines of the style. Adding various tones can help to expand an area.

ACCENT COLOR

Colors can be introduced into a minimalist room by choosing accent pieces in different hues. A turquoise throw cushion or an orange rug makes an outstanding statement. Vibrant red can be used for a bright accent in minimalist decor.

WOW

In fact, an entire wall in a room could be painted to add that ‘wow’ effect to a room. Neutrals are the usual backdrop for minimalist design. Yet bold finishes can look great when paired with black and white. Since minimalism has a calming effect, consider extending the style throughout a home. Minimalism does not have to be confined to one part of a house.

SPA QUALITY

The trick with minimalism is to create luxury with a pared-down setting. This look is possible in interior design. Go for that ultimate spa look. Less clutter will result in a more relaxed you.

Indeed, the calming effect of minimalism might explain its popularity in poor economic times. If people have extra worries added to the daily grind, it is nice to come home and escape to your minimalist retreat. This style is found in homes throughout the country and the homeowners span different economic levels.

CELEBRITY STYLE

“CDs create clutter," says Foo Fighters’ bassist Nate Mendel, who buys music digitally. "And I abhor clutter.”

Just because a person can afford tons of stuff does not mean that they will – or even should - ignore minimalist décor. Actually, even celebrities embrace the minimalist style

Celebrity minimalist: Vincent Kartheiser

Do You Like The Minimalist Style?

The original Hardest Hit Fund, announced by the Obama administration in February 2010 to ease the housing crisis, included five of the "hardest hit" states. The expansion of the fund in March added five more states. On Wednesday, August 11, the US Treasury Department started the next round of help and added seven more states to the "hardest hit" list.

FIVE...THEN TEN

February's funding ($1.5 billion) was earmarked for five states in crisis - Arizona, California, Florida, Michigan, and Nevada. The second round in March ($600 million) was designed to help North Carolina, Ohio, Oregon, Rhode Island, and South Carolina.

MORE THAN TEN

Last week's additional $2 billion extended the aid to Alabama, Illinois, Kentucky, Mississippi, and New Jersey, as well as the District of Columbia. The amount of money given to each state depends on its population.

UNEMPLOYED OR UNDEREMPLOYED

The recipients of the benefits will be unemployed or underemployed home owners who cannot afford their mortgages. The money comes from the Troubled Assets Relief Program (part of the Making Home Affordable Program). Whether you agree with this approach or not, it is hard to deny the need.

CRISIS

Obviously, the crisis is fueled by the same turmoil which was the inspiration for the 'Zero Down' program or the Federal Home Buyers' Tax Credit. The aid might be dressed in different packages and address slightly different angles. Yet when you get right down to the basics, all these measures are meant to raise everyone out of the economic slump. Although many people are finding their way back, some individuals and families are still in crisis. Unemployment is the cause of much of the distress out there.

DIFFERENCE

Last week's 'Hardest-Hit Fund' is slightly different from the original assistance. This recent $2 billion in funding can be used only to help with mortgage payments for "the unemployed or underemployed" home owner. With the February funding, money was given to state housing agencies and they could design individual programs (such as foreclosure prevention programs and similar initiatives) to help their markets.

NEED

The administration believes that there is an urgent and immediate need for this latest program. California though has yet to use the first part of its funding ($700 million) but the state has now received an additional $476 million. Of course, California did come up with a plan – four new programs – from the February funding. The plan has just not gone into operation to date.

NEED FOR FAIRNESS

Besides California's unemployed home owners who are waiting for the program, people in other states are facing similar challenges. As a whole, these states did not qualify in the 'top 17' but that does little to help these unemployed individuals. Actually though, there is supposed to be a $1 billion program under development to help in the other states. The program is expected to be released under the U.S. Department of Housing and Urban Development.

If this program does not come to life, we are left with an odd scenario. Two people are facing the same challenge and one gets help and one doesn't - because of their location. Within any system, the perception of being fair is as important as fairness itself.

What Do You Think About The Expansion Of The "Hardest Hit Fund?"

The estaterebate.com blog was created to be your source for "everything real estate." We have covered topics from low mortgage rates to green homes as well as other relevant and timely real estate issues. The estaterebate.com team is open to your suggestions about real estate topics that you would like to see covered in our blog.

We know that many people have concerns and questions about real estate. In the past, the real estate industry was not so open with its customers. In fact, real estate agents were not even required to explain an agent's true role to their clients. Many customers did not know that a real estate agent is bound by law to represent the seller. A buyer's best option is always a broker who works exclusively for the buyer.

In the 1990s, the Federal Trade Commission (FTC) regulated real estate agents to present a clear picture about their role. Since that time, the industry has been more forthcoming with answers. Yet many people are still in the dark about certain areas of real estate.

Actually, some industry experts believe that the recent housing collapse was spurred on by misinformation given to borrowers. Home buyers and sellers need access to accurate information. Many people have burning questions about the current real estate market.

'Hot' Real Estate Topics

Should I buy now while prices are favorable to buyers?

You should go ahead and purchase a home if you are ready for the commitment. Ultimately, the decision to buy a home has to be based on an individual or family's ability to handle the long term consequences. No matter how good a short term offer or benefit, home buyers have to think in terms of the future. Government incentives or low mortgage rates can be tremendous benefits to buyers who are ready to buy a home. Yet if one is just thinking in the short term, it is easy to get in over your head.

Why do housing markets vary across the US?

Most variations in housing markets are tied to the unemployment rate in the region. Generally, the real estate market is not as strong in areas of high unemployment. Yet sometimes there are exceptions to that rule.

Should I expect a slight drop in my home's value?

The current market does not favor the seller. You can probably expect a substantial drop from 2007 prices. Many sellers in today's market are not expecting the lower returns. They find it hard to believe their real estate agent's quote. A home seller can check with additional sources about local prices. Yet sellers must be prepared to make some compromises in the current marketplace.

How will real estate investors fare in the current market?

The real estate game can usually be lucrative for investors if they are involved in buying and selling. When you are playing both sides, price is not as huge a factor as for the individual home buyer or seller. Real estate investors have to keep the motion going to build profitable investments. Investors cannot afford to be stalled in the process.

Do You Have A 'Hot' Real Estate Topic Suggestion For estaterebate.com? 

Low mortgage rates translate to affordable monthly payments in the short term and substantial savings over the life of a loan. As well, low rates make home owners consider refinancing. The cost of the refinance does not seem so bad with savings in the picture.

Drop In Rates

During the past week, the rate on the 30-year fixed mortgage, the most widely-held type, fell from 4.38% to 4.28%. Within the past few days, 15-year fixed mortgage rates dropped from 3.87% to 3.85%. With similar decreases in adjustable rate mortgages (ARMS), it looks like the low mortgage rates might take some of the sting out of the economy in this post-Federal Home Buyers' Tax Credit period. The only catch is that lending guidelines are tighter than ever before and not everyone will qualify for a low rate.

High Credit Score

When it comes to credit and mortgages, the person with the highest credit score (usually 740 and higher) gets the lowest rate. Although a high credit score is not the only requirement to be eligible for a low mortgage rate, it can make a big difference. Borrowers must aim for the more favorable rate because it can make a noticeable impact on monthly payments.

A person with a 760-850 credit score could end up with a monthly payment in the range of $1500; an individual with a 620-639 score might have to pay over $1700 per month. High credit scores can mean huge savings. It is advisable for a borrower to have the best possible credit rating before he approaches a lender.

Debt-to-Income Ratio

As well as that high credit score, borrowers must have a certain debt-to-income ratio. Usually lenders insist that a borrower's overall debt does not exceed 45% of their income. Actually, debt-to-income ratio is given huge consideration in getting low mortgage rates. Even if a person's credit score is less than perfect, a sizeable income (or assets) can turn the tables in their favor.

Few Takers

Despite the low mortgage rates, you need not expect to see every ' home for sale' sign taken down in the next few weeks. Some people are taking advantage of the low mortgage rates but not everyone is taking the plunge. On the surface, low mortgages look like a deal that nobody could (or even should) resist but people worried about unemployment are not in a buying mood.

High Standards

In addition, lenders have those strict guidelines in place. The rules are not written to welcome the person with the low credit score. Of course, it does not follow that an individual with bad credit can never buy a home.

Credit Restoration

Credit repair is always an option and a restored rating can eventually open the doors to a new home. The repair process takes effort and commitment but credit restoration is worth the effort. With a good credit score, you won't miss out on opportunities such as the current low mortgage rates.

Are You Planning To Take Advantage Of The Low Mortgage Rates?

In every relationship in life, it really works better if you like the other person. The home seller-real estate agent relationship is no different from any other partnership. Of course, it helps if you think your real estate agent is the perfect match for you.

Yet according to a recent survey, home sellers are not feeling the love towards their agents. Home buyers seem more satisfied with their fate but home sellers are a dissatisfied lot at the moment. According to J.D. Power & Associates, a marketing-data company, the home sellers' satisfaction score is down 40 points from last year. In the meantime, buyers' satisfaction with their agents has risen 12 points.

The discontent seems to have grown because home sellers are blaming the messenger. With the end of the Federal Home Buyers' Tax Credit and the general economic climate, sellers might have to consider reducing their prices. Some home sellers are not taking kindly to that message. Real estate agents are bearing the brunt of the blame.

Industry observers say that most agents are doing an expert job for sellers. The real estate agents are negotiating and marketing to the best of their ability. Their popularity keeps slipping, however, and their image is being influenced by the state of the economy.

The reality is that home sellers have to be prepared to put forth extra effort in a buyer's market. Some sellers are not willing to do that and, after all, it is much easier to blame your real estate agent. When home buyers can have their pick, sellers want to make certain that they pick their home.

Maybe it will require a reduced price to make that sale. Maybe it will take more renovations and better landscaping. When buyers have a choice, they are going to choose the best model. Home sellers might want to pay attention and listen carefully to their real estate agent.

It may not be smart to stick to the price that houses on the street were selling for in past months. What are homes selling for today on your street? Sometimes people even make the mistake of focusing on the price of a similar house across town.

Home sellers have to be realistic because real estate is a very 'local' matter. Sellers should stay with the price trends in their neighborhood. They do not want to go above those prices and be left the loser. Home sellers should be open to their agent's suggestions. Problems with the sale of a home are not always the fault of the real estate agent.

Of course, as in every profession, there are real estate agents who do not want to put in any extra effort. Home sellers should always take some time to choose the right agent for their individual needs. Since marketing of the home will be the key to a successful sale, sellers should check out the agent's tools and approach.

Sellers need someone who will do everything possible on their behalf – online marketing, open houses, and more. Yet home sellers cannot expect the real estate agent to be able to control the economy. Sometimes the seller just has to go with the flow.

Do You Like Your Real Estate Agent?

'Zero Comeback' – the title implies that nothing has come back but something has made a return appearance. The 'zero down' mortgage program has once again raised its pretty or ugly head – depending on your point of view. The question is - should there be a 'zero down' program or should there be 'zero comeback' -- no comeback for this government initiative.

Legislation that will restore the Department of Agriculture home-buying program is in the works. It is not finalized but the wheels are in motion. This program offers 'zero down' loans in specific parts of the country. Low and middle-income borrowers will be eligible for these 'no-money-down' loans.

This initiative is not a new one. 'Zero down' has already been funded to the tune of $13.1 billion but funding was exhausted earlier this year. There are passionate feelings on both sides about this program. Obviously, your opinion will depend on how you think this program impacts you.

If you are a builder, you love it. If you need a home, you welcome it. If you are an industry watcher, you worry about it. If you are a taxpayer, you might imagine another bailout in the future.

Industry observers point out how 'zero down' offers played a huge part in the housing crisis. On the other hand, the USDA defends the program and lists the guidelines to keep out buyers who appear to be bad risks. The USDA has confidence in the 'zero down' approach.

They remind us that the foreclosure rate under the previous program was less than with the Federal Housing Administration. The USDA explained some of the rules for the borrowers. They cannot make more than 115% of a county's average income. The loans are not for extraordinary amounts but it is not petty cash either as the average loan is $112,000.

Yet if anything goes wrong with these loans – and anything can and probably will – the government is backing these mortgages. Affordable mortgages might come with a cost. Maybe the taxpayer will eventually be putting much more than 'zero' dollars down to clear up the mess down the road.

Of course, government officials insist that support is necessary in these troubled economic times. The 'zero down' program has helped millions of low and moderate-income earners get homes. Without the program, they would not have been able to get a loan.

On a personal level, as a caring human being, few would argue against families getting homes. If you examine the statistics and the risks and the probabilities, however, you might arrive at a different decision. Yet as a government in a caring society, the people should trump the profit. Of course, one reason why this is a divided issue is because so many are hurting and everyone does not qualify for this help.

Expect opposition to this 'zero down' program. Some will look at it from a practical 'taxpayer' point of view. Others will see it as an unfair program. If you need it and you qualify for it, you'll be glad that 'zero down' has made a comeback.

Do You Agree With 'Zero Down' Mortgage Programs?

The Federal Home Buyers' Tax Credit was designed to create a domino effect that would inject life into the housing market. The tax credit was meant to encourage home buyers to act on their dream and home sellers would reap the benefits. Of course, the overall idea was to buoy up the economy.

The plan worked to a degree. Yet even with the Home Buyers' Tax Credit in place, every home seller did not find a buyer for their property. With the recent expiration of the tax credit initiative, it seems that there might be more challenges around the corner. What does the future hold for home buyers and sellers?

Home Sellers

Regardless of the economy, selling a home is a big step. The seller has to be prepared for a few challenges. Selling a home requires commitment, effort, and compromise.

When some home owners could not sell their homes – even in the Home Buyers' Tax Credit period – they took the matter into their own hands. The owners invited everyone around for a 'house selling party' and offered an $8,000 reduction in the price of their home. In other words, they created their own personal 'home buyer tax credit' that would work for them and the lucky buyer.

No doubt, most would classify this action as an 'incentive' and it is – an incentive of the legal variety. There is no law against dropping the price of a home. Of course, if the buyer had been willing and able to contribute that $8000, it would mean a much sweeter deal for the sellers.

Today's home buyer, however, is a sophisticated type who knows the score. With the latest technology used in real estate and countless virtual resources at their fingertips, buyers understand the market better than ever before. They know in detail about the properties for sale, purchase prices, and the trends in sales.

The modern buyer will not be impressed by gimmicks but they will react to a lower price. In an economic downturn, home sellers have to consider that possibility. Sometimes lowering the price is the only solution for a quick sale. Maybe more home buyers will have to take the 'rebate replacement' approach.

Home Buyers

The Federal Home Buyers' Tax Credit encouraged some interested parties to take that final step towards owning a home. We must hope that they did not make that decision based solely on the existence of the tax credit. Buying a home carries with it a long-term mortgage, maintenance costs, and property insurance, as well as other expenses. Home ownership involves taking on a financial commitment far greater than $8000.

If any home buyers were jumping into the market because of this tax credit, we should be glad that the program has reached its end. Home sales based on a tax credit have no foundation and the set-up will crumble in the future. Individuals should not take on the major commitment of a home purchase without being prepared on every level. Post-Federal Home Buyers' Tax Credit, responsible buyers will still purchase a home at some point – maybe a cheaper home or maybe at a later date. If people were planning to buy a home for the tax credit, the end of the program is a blessing in disguise for them.

Do You Think Home Sellers Will Be Forced To Reduce Prices Following The End Of The Home Buyers' Tax Credit?

Do you have a green home? I don't mean a green-painted home, although if you've used zero VOC (volatile organic compound) paint, you've made a great start. Of course, I'm referring to 'green' as in the 'environmentally-friendly' choice. Are green homes worth the price?

Recent developments would lead us to wonder if enough people are committed to going green. Within the past year, graduate students of the University of Kansas School of Architecture, Design & Planning could find no buyers for two green homes. Even more remarkable is that the homes were selling for half their worth.

Every year, Dan Rockhill, a well-respected professor at the university, organizes the non-profit Studio 804 – a design/build program for architects-to-be. The homes sell cheaper than normal due to the donations from businesses as well as the student labor. These bright, new architects have produced award-winning, energy-efficient homes. Their latest project was an ultra-efficient house in Kansas City, Kansas.

Actually, Rockhill expects this green home – the Prescott Passive House – to be the first in Kansas to receive a certification from the Passive Institute (a green building standard demanding 90% less energy than the average home). The Prescott Passive House has been chosen already as 'This Week's Green House' and is expected to earn top marks from the U.S. Green Building Council. Of course, the 2009 Studio 804 home received a first-class rating from the USGBC and that house is still on the market.

Naturally, economic conditions are not the best for home sales. Yet the reluctance of people to invest in 'green homes' is rooted in more than the economy. Home buyers say that they are committed to a green home. Builders have even noticed that trend and are incorporating green features into their buildings.

Yet many home buyers are not prepared to pay extra for a green lifestyle. You may think that is understandable with the state of the economy. In most cases, however, the cold shoulder been given to green is not based on available finances. Industry leaders have observed that some home buyers turn a blind eye to 'green' and put their money into eye candy like state-of-the-art countertops or Jacuzzis.

So, what about the green? Choosing a granite countertop over high-performance windows is like choosing the frosting without the cake. The stuff is sweet is but the fluff has no foundation.

Would I choose the 'green' over the 'granite?' Yes! The reality is, however, that some home buyers turn away from green of their own choosing. Other home buyers just want a roof over their children's heads and they are not able to afford the granite or the green.

If you can afford to choose green, it makes sense to go for it. If you cannot afford "green," that is society's shame. Our world needs more affordable housing and it should be affordable 'green' housing. Demand and incentives will encourage builders to go 'green' and still maintain a reasonable rate for buyers.

Developers have to know that there is something good in it for them. I could appeal to the real estate tycoons and say – come on, build green, even if you make less profit. So, you make $1,000,000 less, but look how you will be helping everyone to live in a healthy and green environment. I could launch that appeal but the real estate market is basically about the bottom line.

Our society has to come to a point where "not being green" is viewed as a "totally unacceptable choice." Over the years, we have seen awareness and education cause a total shift in certain attitudes in our society. We need to go in that direction with energy-efficient homes because 'living green' is worth any price.

Would You Pay Extra For A 'Green' Home?

Cashback and listing commission auctions are innovative tools in the real estate industry. These auctions work to the advantage of home buyers and sellers. In addition, the system helps real estate agents get referrals. Cashback and commission auctions create a win-win situation for everyone in a real estate deal.

Real estate agents connect with potential clients and bid for their business. Home buyers and sellers save money and receive higher discounts and commission in the process. With a traditional home purchase of a $450,000 property, the buyer’s agent receives 3% commission ($13,500) but the buyer receives nothing. Yet if you purchase a home using a cashback auction, the buyer’s agent will still receive $13,500 commission but will rebate 50% ($6750) of that amount to the buyer at closing.

With traditional real estate commissions, the seller will pay 6% of the property value to the agent in listing commission. If the property is valued at $450,000, the seller must pay $27,000 to the agent at closing. If the seller had used a listing commission auction through estaterebate.com, the seller would have received discounted commission offers and saved $9,000 in listed commission. By choosing a commission auction, the seller will save an additional 2% of the property value.

Why Buyers Should Choose Cashback Auctions

Cashback

Home buyers can go with the traditional home purchase and recover nothing or go with a cashback auction and get cashback. Create an auction and receive cashback bids from local real estate agents. Buyers select the bid which suits their needs. Best of all, there is no obligation to accept any bid and buyers can maximize their savings.

Why Sellers Should Choose Commission Auctions

Savings

Commission auctions offer similar benefits to sellers as cashback auctions provide for buyers. When sellers create commission auctions, they receive discount commission bids from local real estate agents. Sellers select the best bid and end up saving money on commission at closing.

Why Real Estate Agents Should Choose estaterebate.com

Referrals

The real estate industry is ever-changing and the smart agent will keep pace with the latest developments. In today’s real estate market, every agent wants that extra ‘edge’ to gain and keep clients. There is no longer a need for agents to pay a substantial percentage of commission for referrals or they do not have to buy leads.

A traditional referral fee on a $100,000 transaction would be $750 (25%). If real estate agents advertise their services on estaterebate.com, they connect with verified prospects, make bids, and get business – at zero cost. No upfront costs - no monthly subscriptions - no maintenance fees! A nominal, flat advertising fee is payable only if an agent closes a deal over $100,000.

estaterebate.com – The Future of Real Estate

It does not make sense for home buyers, sellers, and real estate agents to stay trapped within the traditional system. estaterebate.com gives all parties in a real estate deal an opportunity to get the most out of the transaction. Basically, estaterebate.com and cashback and commission auctions are paving the way for the future of real estate. Get in on the deal!