Refinancing Helps Homeowners

Housing started heating up this fall, as recent Federal Reserve actions brought mortgage rates down to new all-time lows. It’s possible for homeowners to refinance and save more than ever now.

Over the past year rates have fallen more than half a percentage point on 30-year home loans, reports mortgage investment firm Freddie Mac. That can translate into substantial savings every month for owners who act soon. Several other factors also have emerged this year which are helping homeowners to save money by refinancing –

* Rising home prices are making it easier for owners to obtain a new loan. Having positive equity is a plus when you’re refinancing.

* Revised loan programs are helping owners who have been affected by falling house prices to refinance on better terms. Many owners can refi even if their home’s current value is less than their mortgage balance.

* Lower rates on all mortgage types let owners refinance into a program which fits their current financial situation.

Someone who purchased with a 30-year loan may benefit by moving into a 15-year mortgage now. They’ll pay off their home loan faster, and can look forward to a debt-free lifestyle.

Homeowners who refinanced within the past year often find they can boost their monthly savings by refinancing again. But it’s important to act quickly, since no one knows how long today’s favorable rates will remain available.

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Unafraid of Shadows

Fewer homes for sale are a main factor behind rising house values throughout the country. Yet some observers wonder if the need to sell large numbers of residences which are “shadow inventory” could drive prices lower again.

Shadow inventory refers to houses which are likely to eventually be sold in foreclosure. Such properties often are discounted to find a buyer quickly.

However, The Wall Street Journal believes shadow inventory is “not as scary as it looks.” First of all, homes in foreclosure are “concentrated in a handful of markets – it isn’t inherently a national phenomenon,” the Journal notes.

Ongoing sales also have significantly reduced the number of shadow homes over the past two years, states The Wall Street Journal. Reduced activity by home builders in recent years has made it easier for shadow inventory to find buyers.

Economists point out that as long as shadow properties are being sold and their number is going down, that process shouldn’t markedly affect the rest of the market. Purchasers who wait until all the shadow property is sold are likely to miss the best real estate values.

Housing Moves Ahead

Our real estate recovery continues to grow. Average prices of houses which weren’t sold due to foreclosure went up almost three percent from March to June, says real estate data firm FNC Inc.

The S&P/Case-Shiller Home Price Indices also found that home prices rose during the second quarter of this year. Most of the country is seeing values rise, reports the National Association of Realtors (NAR).

Sales are going up, as well. During the summer home sales were running at a ten percent faster pace than a year earlier, NAR says.

Many experts find it reassuring that home prices are rising at a time when the economy is growing slowly. In recent years housing has been a drag on the overall economy; its current strength suggests that real estate has finally turned the corner.

EVERYONE GAINS

Anyone who needs to move will likely find they can sell their residence for more than they could’ve a year ago. Yet they’ll benefit from today’s great mortgage rates when purchasing another home.

Persons who buy now may look back at it as one of the smartest things they’ve ever done. You can gain affordable monthly payments today on a house that you’ll enjoy living in for years.

A New Approach to Real Estate Investing

Rental properties provide plenty of benefits for investors: extra tax breaks, monthly income, and the opportunity for appreciation. Yet owners must be willing to maintain and manage their units to achieve those goals.

One strategy employed by investors is to let a young adult child live in the home. They can select and monitor tenants, and insure that the property is well-maintained.

Consider this approach if you have a child in college who needs a place to live. Or if your youngster has a job which he expects to stay in for several years, you can let him or her be your eyes and ears in a rental home.

Everyone can come out ahead as a result. Overseeing a property lets your child acquire new skills.

If your youngster is out of school, you can offer a reduced rent in return for helping you manage the real estate. Or if your child is going to college, you can give them money and they can write rent checks to you without any adverse tax consequences.

Today’s low rates and attractive prices are providing real estate investors with opportunities. Adopting a novel approach to managing your units can help you be more successful.

At some point you may want to offer your child the chance to purchase the property from you. Using a rent-to-own agreement can turn this idea into reality.

Get Ready for a Recovery

Apprehension about the economy continues to dominate headlines. However, there also are positive signs which aren’t being widely reported.

Real estate sales are increasing, as buyers take advantage of discount home prices and record-low mortgage rates. Strong demand is reducing the number of properties available for purchase.

Homes are selling faster as a result. The National Association of Realtors (NAR) reports that the amount of time houses were on the market dropped by 30 percent this summer from a year earlier.

News media report that wages are rising at a slow pace. Yet economists point out that since inflation is low now, our purchasing power actually is rising.

Recent figures from the Commerce Department show consumer prices going up 1.5 percent over the past twelve months. But in the previous year prices rose 2.6 percent.

REFI SAVINGS

Another plus is the boost to spending power which many Americans are feeling once they refinance and lower their monthly housing costs. Cutting your payments has the same effect on your budget as getting a pay raise!

A typical refinancing homeowner with a $200,000 mortgage now is cutting his payments by nearly $3,000 annually, states mortgage investment firm Freddie Mac.

Although we wish the economy was stronger, it continues to advance steadily. “The U.S. economic recovery is today far more mature, more broadly based and therefore far less vulnerable to external shocks than at any time since the recession ended,” notes one economist.

“The memories of 2007 through 2011 are clouding too many people’s vision,” explains real estate consultant John Burns. Although he says challenges still remain, “the demand, supply, and affordability measures are in place to help us put the housing downturn behind us and move forward.”

Real estate is entering a recovery, Burns predicts. “Don’t miss the ride,” he urges.

“America’s economy is once again reinventing itself,” The Economist adds. Our long-term growth opportunities are benefiting from a reduced reliance on foreign oil and increased exports for many U.S. firms.

Now is an excellent time to take advantage of our ongoing recovery in both real estate and the overall economy, by finding a terrific bargain on a home.