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Cash Out Refinance or Home Equity Loan

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You may be able to get cash if you have substantial home equity.

A cash-out refinance or a home equity loan let you borrow against the equity in your home, with your home as collateral. A cash out refinance replaces your current mortgage with a new one. A home equity loans are additional loans that you take out over your mortgage. Consider the pros and cons of each option before deciding which home equity product is best for you.

Both a home equity loan or a cash-out refinance mortgage can be used to fund similar projects, such as home improvements and paying off high-interest debt. Both loans use your property as collateral. If you default on one of them, it could be foreclosed.

Although cash-out mortgage refinances serve the same purpose as home equity loans, there are important differences. Cash-out refinance refers to taking out a loan in order to pay off your remaining mortgage balance. This will effectively replace your mortgage with a new loan. A home equity loan, which is a second mortgage, comes with its own terms and interest rate.

A cash out refinance repays the principal balance of your first mortgage loan and provides a new loan to pay for it. The amount of the newly refinanced loan is the balance due on your first mortgage and the amount that you are “cashing out” with the equity.

The interest rate for cash-out refinancing might be higher than the current one. The loan term can generally last up to 30 year.

Certain lenders and federal programs might have lower requirements for cash-out refinancing . In the event of default, the refinancing lender will assume the first mortgage in a cash-out refi. Lenders might offer lower rates than what you would get with a home equity loan because they have easier access to your house as collateral.

Home equity loans are often used to finance large-ticket items, home improvements or consolidate high-interest debt.

This is a second mortgage against your house that has its own terms and interest rates. It’s separate from your original mortgage. Refinance using a home equity loan means you borrow against your home’s equity, which is the difference between your home’s market value and your mortgage debt. You can borrow up to 85 per cent of the equity in your home. Your income, credit history, and other financial factors will also affect your loan amount.

Home equity loan rates might be higher than other options for refinancing. However, the differences can vary from one bank to another and over time. The repayment term for home equity loans can be up to 30 year.

Lenders may not charge origination fees. This results in closing costs that are lower or even zero. In contrast to some cash-out refinance loans, home equity loans don’t require mortgage insurance.

This scenario is where refinancing with cash-out refinance loans can be cheaper, despite the higher loan amount and closing costs. Because the cash-out refinance rate is much lower than that of a home equity loan, this is why.

Home equity loans have a higher interest rate than cash-out refinancing. While home equity loans are generally cheaper than home equity loans due to lower closing costs, their interest rates can be more costly over time.

A home equity loan is a good option if you have excellent credit and can find a loan with low interest rates or waive closing costs. The cash-out refinance offers a significant advantage, with lower interest rates.

It’s ultimately a personal decision. This will depend on how much equity you have in the home and your credit rating. To determine which option you are most likely to be approved for, it is equally important to review the qualifications for each option.

If you have strong credit and want to draw out large amounts of equity, a home equity loan may be an option. If you are looking to lower your mortgage payments and withdraw funds from your equity, a cash out refinance might be a better option.

Cash-out refinances and home equity loans are two strategic options to access the equity in your home. To determine which approach is best for you, consider your financial situation and goals. To determine which option you are most likely to be approved for, it is equally important to review the qualifications for each option.

If you have good credit and want to draw out large amounts of equity, a home equity loan may be a viable option. A cash out refinance might be a better option if your goal is to lower your mortgage payment and withdraw funds from your equity with one loan product.

Compare offers from different lenders, regardless of the path you choose. You can also request an itemized list of the lending fees from your chosen lender to estimate how much the loan will cost.

 

Original Blog: https://www.bankrate.com/home-equity/refinance-vs-home-equity-loans/ 

Change Is Good

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New Year. New Possibilities. New Start.

If your thinking of making a move this new year, it would be our pleasure to be your real estate resource.

We would love to connect with you and talk more about your options.

Call Preferred Properties of Texas today to schedule a walkthrough.

Mortgage In 2023

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Home shoppers are being tested this year due to record-high home prices, rising inflation, and high mortgage rates. Many homebuyers looking for an affordable mortgage have been left in more uncertainty going into 2023.

First-time homebuyers are particularly affected by skyrocketing mortgage rates and home prices. This has resulted in a decrease in their buying power and down payment.

If you want to secure the best mortgage, even though the housing market is slowly improving, you should be keeping an eye on the market and any economic moves by the government.

The Federal Reserve aggressively increased its benchmark federal funds rates in an effort to reduce rising inflation. This was done throughout 2022. Although rate hikes by the Fed do not directly affect mortgage rates, they have an impact on the bond market which in turn has an impact on mortgage rates.

The Federal Reserve will not stop raising the fed funds rate aggressively until it believes runaway inflation is under control. This will drive mortgage rates higher.

Economic consensus seems to be that the economy will see strong signs that inflation is slowing down in the first half of next year. All indicators point to more upward pressure on mortgage rates in the future than a decrease in 2023.

Many shoppers have stopped buying in the market because of record mortgage rates and the uncertainty surrounding the housing market.

Will 2023 be a better time to get a mortgage?

Many housing experts believe that we will see a greater decrease in home prices month-over-month next year.

Now, we expect home prices to decline year-over-year in 2023. The national median single-family home value is expected to drop 5.5% over the course of the year.

However, the supply shortfall and strong underlying demand will eventually limit home price appreciation.

The home depreciation rate will not be the same in all markets. There will be regional variations. Markets that were once popular with buyers will see extreme swings to their disadvantage compared to those in less-populated areas.

Remember that home appreciation has risen in an abnormally high rate over the past few years. Comparing to the second quarter 2020, the average home sale price rose 45% to $542,000.

Some experts predict that the best case scenario for a 30-year fixed mortgage rate will be around 5.5% by 2023. Other experts expect rates to remain in the 6.5% to 7.5% range throughout the year. Freddie Mac recently forecasted 6.4%.

 

Original Blog: https://www.forbes.com/advisor/mortgages/how-to-get-best-mortgage-in-2023/?&utm_source=ra&utm_medium=referral

Today’s Housing Supply Gives You Two Opportunities

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The increase in housing supply relative to last year might not seem like good news for potential sellers. However, it does offer two key opportunities in today’s housing market.

An article derived from Calculated risk helps to put inventory gains in 2022 into perspective, by comparing them with recent years ( Graph). This graph shows that supply has exceeded 2021 levels by 58%. The bigger picture is easier to see if you go back further. We are 35% less than the housing stock that we had in 2019, the last normal year of real estate.

This inventory growth allows you to sell your house if it is not meeting your needs , or lacks the space and features that you desire. You’ll find more homes to choose from when searching for your next house.

A local real estate agent can help you stay informed about the properties in your area. A professional can help you write a winning offer once you have found the right one.

However, inventory remains low in comparison to normal years. This is not going to change overnight. If you price your house correctly, it should still be in high demand from potential buyers.

You have many homes available to you if you are a homeowner and want to sell. However, inventory levels may be low so you can still sell your home.

If you’re ready to get started, contact Preferred Properties of Texas 

 

Original Blog: https://www.keepingcurrentmatters.com/2022/12/13/ready-to-sell-todays-housing-supply-gives-you-two-opportunities/

 

Selling Your Home During A Real Estate Slowdown

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Selling a house is not as easy as it used to be last year, or six months ago. Many sellers feel they are facing a Sisyphean task, given the news that we seem to be sliding into an unofficial depression and a serious slowdown in the home market. A Federal Reserve interest rate increase of 0.75% will likely push up mortgage rates, which have already reached a 20 year high. This will further stress a stressed market.

If you are in a position where you can sell, there is no reason to lose heart.

It might not be possible to receive multiple offers for your home if it is priced higher than the asking price. With a little planning and strategic thinking, it’s possible to schedule the moving trucks in no matter how fast you are.

We hear from real estate professionals who have seen worse markets than we think.

Many potential homebuyers may struggle to balance the realities of rising mortgage rates with their goals. Offering an interest rate buydown can help reduce their monthly mortgage payments. This is a great way to make them feel at ease.

A buyer and his lender will usually negotiate an interest rate buydown. Sellers may offer to purchase down a buyer’s mortgage. A seller-paid buydown is where the seller pays a specified amount to the mortgage lender of the buyer to lower his interest rate.

A rate buydown is a special amount of money that is credited to the buyer at closing. This money can be used to pay points on the buyer’s mortgage. Buyers have the option to refinance if rates drop again so they can use this to pay their closing costs.

A buydown can be arranged by offering to pay a percentage point. You can also offer to reduce their interest rate by one or two points at closing. This will directly address a problem that many buyers face and likely have less impact on you than you realize. A drop in price of $30,000 to $50,000 is still a small amount. In today’s market, buying down points works well.

If your home wasn’t built recently, it’s likely that there are big-ticket items such as your boiler, your roof, or your HVAC system that need to be replaced.

If your roof is more than 15 years old, you will need to replace it soon. It is a great bonus to offer to do this before the sale or to escrow funds to pay the costs.

While some sellers may have to reduce their prices, you can make it more likely that you land a buyer. You’ll be able to quickly adjust your listing and get multiple offers and lots of showings. You can also trigger interest by scheduling micro price drops. Schedule price drops to be made available at times that you are available for showings, and go down by 1% every month.

You might be willing to give up any assets you don’t usually include in a home sale if you are selling your home or downsizing. You might consider offering one of these to buyers as a tempting tidbit. It is difficult to sell right now with the competition so capturing buyers‘ interest is key. Sometimes it is as simple as offering and highlighting high end appliances, unusual items, or cars, as well as solar panels, large-screen TVs, and even gardening tools.

The U.S. Department of Veteran Affairs backs VA loans and they don’t require down payment or mortgage insurance. This makes them very popular among those who are eligible. One benefit that many are unaware of is the possibility that VA loans may be assumed or taken on by buyers. You should market any VA loan that you may have. They can often cover up to 40% of the sale price and are typically at a very low interest rate.

The current housing market is extremely uncertain. Adding a layer of predictability to the equation can prove to be a great boon.

Sellers might offer to buy a home warranty to protect their home while it is on the market. The warranty can be transferred to the buyer after the property is sold.

Most home warranty contracts last for 12 months and can cost between $250 to $1500 per year depending on the warranty provider.

Your buyer will feel confident knowing that a home warranty is included with their home purchase. They feel more confident making big decisions about their home.

 

Original Blog:  https://www.realtor.com/advice/sell/how-to-sell-your-home-during-real-estate-slowdown/

 

If Mortgage Rates Remain at 7%, Home Prices Won’t Fall Significantly. However, They Could Rise Slightly in 2023.

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According to Lawrence Yun, Chief Economist at NAR, severe shortages of housing inventory will keep large price drops from most of the country next fiscal year, despite high inflation, rising mortgage rates, and slowing sales activity.

Yun shared his outlook for 2023 at 2022 NAR NXT, The Realtor , Orlando, Florida.

Yun stated that home prices have been stable in most areas of the country because there is very little inventory. Some areas are experiencing price increases, while others, most notably California, are seeing prices drop.”

Yun said that the market conditions today are fundamentally different from those during the Great Recession.

Yun stated that the housing inventory was only about 25% of 2008’s. Yun said that distressed property sales are nearly non-existent at 2% and not near the 30% mark during the housing crash. Because of the substantial price appreciation over the past two years, short sales are nearly impossible.”

Yun explained that the extraordinary rate at which mortgage rates rose in 2022, from 3% in Jan to around 7% today, has caused a downturn in housing market.

Yun stated that the decline in home sales and home construction has “brought down GDP.” GDP would be positive if the housing market were stabilizing and not falling.

Yun said that there are signs suggesting that mortgage rates will rise, especially since October’s consumer price index showed an inflation decline. However, he expressed concern over the spread between federal funds rates and mortgage rates.

Yun stated that the gap between the 30-year fixed rate mortgage rate and government borrowing rate today is larger than it was in the past. If there wasn’t this gap, mortgage rates would not be 7%. They would be 5.8%. Normal spreads would help revive the economy. If inflation is eliminated, we will see less anxiety in the financial markets, and lower interest rates which will allow owners to refinance.

Yun predicts that home sales will decline by 7% in 2023. However, the median national home price will rise by 1%. Some markets may experience price increases while others see price drops.

He projects a strong housing rebound in 2024 with a 10% increase in home sales and an additional 5% in the median home price.

The National Association of Realtors represents more than 1.5million members in America’s residential and commercial realty industries.

 

Original Blog: https://realtytimes.com/real-industry-news-articles/item/1045981-nar-s-lawrence-yun-predicts-us-home-prices-won-t-experience-major-decline-could-possibly-rise-slightly-in-2023-if-mortgage-rates-remain-at-7?rtmpage=

Preferred Properties of Texas

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