Two Main Financial Decisions Faced by Home Buyers and Home Owners Today
One of the most important financial decisions an individual will make is often revolved around real estate, mainly buying or refinancing a home. Before doing anything however, Search Realty advises the importance of seeking the right advice from trained professionals.
A financial institution can easily let a potential home buyer know what they can afford. But that is about all they can tell the potential home buyer. For more in-depth knowledge and analysis, a potential home buyer, and even a home owner seeking refinancing, should seek out the help of a realtor, who has the training and know-how of the housing market, to guide, the home buyer and home owner, in the right direction.
Search Realty addresses two key financial decisions that home buyers and home owners face: Affordability and Refinancing.
The first key decision is in regards to the home buyer and whether or not they can afford a house for sale. Almost everyone that buys a home needs to borrow some money to pay for it. The simplest way to determine affordability for a home is to determine how much money can be borrowed as a mortgage loan, which should involve a consultation with a lending institution. The institutions apply specific standard tests, based on family income and taking into account debts owed, in order to determine the amount of money available for a loan.
Once a potential home buyer determines how much they can actually afford, they should then seek out the assistance of a realtor. A realtor has intimate knowledge of the local real estate market, and also has access to Multiple Listing Service, which they can utilize to create a personalized list of homes for sale that meet the needs of the potential home buyer. Search Realty has both realtors and mortgage brokers, so they act as a one-stop shop when it comes to a home buyer’s (or home seller’s) real estate needs.
The second key decision lies with the home owner and is in regards to refinancing. Search Realty advises that the home owner take into account three basic factors before deciding on refinancing. These factors are: interest rate, length of stay within current home, and the actual goal to be accomplished by refinancing.
A standard rule-of-thumb is to refinance if current mortgage rates are at least 1.5 to 2.5 percent points below the existing rate. This is because the home owner will need an adequate rate reduction to compensate for the expense of refinancing. Costs that are directly associated with refinancing are penalty fees, fees for appraisal and other related services.
Another factor tied into interest rate is how long the home owner plans on living in their home. Here, it is simply determining how long it would take to recoup the refinancing costs through the monthly savings from a lower interest rate.
The final factor is to determine financial goals. There are a lot of reasons why a home owner may choose to refinance. Some, especially those nearing retirement, may want to pay off the mortgage earlier and usually choose to refinance to a shorter term. Others, such as those who are facing financial difficulties, may choose to reduce monthly payments. Many home owners with variable rate mortgages choose to refinance when rates are low, due to the fact that it provides security and peace of mind.
Regardless of whether it’s a home buyer or home owner, and the decision is trying to determine if buying a home is affordable or if it’s refinancing, Search Realty is there to lend a helping hand.
Search Realty has a talented array of agents that can handle each step of the home buying or home selling process. All of the company’s agents are guaranteed to return and respond to emails and phone calls within 24 hours. This follows suite with Search Realty’s mandate, which is to ensure that all of its clients are treated with the utmost respect and cared for effectively and responsively.