Financial Considerations When Selling a Home

Are you considering selling your home? It’s certainly not a decision tobe made lightly, especially after making such a large investment. Whether you’re downscaling, upsizing, moving to a new area, or are looking to make a profit – there are always financial considerations to be made when it comes to selling a home.

Here are some important financial factors that may determine when and if you’re ready to sell.

Your home’s worth

Before putting your house on the market, you’ll want to have an understanding of the value of your property. This can change over time, which is why the first step is to see how much your house is worth in the current housing market.

You can do this by researching real estate websites to find out how much similar homes in your area have sold for. A formal appraisal is another approach that can provide you with a more accurate number based on home sales in your community. Of course, a real estate agent can also assist in determining a listing price for your home.

How much it will cost

Finding out the value of your home is just the beginning of the selling process. Prepping your home to be sold is where things can get pricey. You’ll likely need to do a deep clean, paint, or even repair anything you’ve been waiting to fix. If you want a higher value on your home, you should plan for any home renovations ahead of time.

Outside of prepping costs, there are other fees associated with selling a home that you might not have thought of. A typical real estate agent, for example – will typically charge a commission fee of up to 6%. You should also expect to pay a closing cost of 1-3% of your house price, which includes the home inspection, appraisal, and insurance costs. Be sure to list these expected extra costs on a spreadsheet for reference as you begin the process.

The housing market

As a seller, you’ll want to evaluate the housing market to get a better idea of when is the right time to sell. Factors like interest rates on home loans can be a key indicator. Time of the year can also make an impact on if you’re able to sell and for how much. Depending on where you live, the market typically peaks in April through July with slower periods in the winter months due to the cold weather and holidays. Overall, timing definitely plays a role in how much you’re able to sell your house for.

Selling takes time, planning, and research. If done right, you’ll be able to successfully sell your home and even make a profit. Outside of finances, there will be other factors to evaluate and our financial experts are here to help. Contact us to get started, or stop into your local branch on one of our upcoming branch mortgage days to speak with a representative on-the-spot!

How to Finance Your Home Improvement Project

Whether you’re preparing to sell or are just due for an upgrade, renovating your home can help increase its value over time and keep it up to date. Financing a home improvement project, however, takes a lot of planning and consideration. Thinking ahead will save you headaches in the future, so make sure to consider these options before you start your next renovation endeavor.

Save, save, save

The safest option for financing your home improvement project is to save as much money as you can. First, determine a ballpark range of how much the project could cost total, and then make a plan to start saving. While it will take time to build up savings, you won’t have to worry about paying back a large sum of money later. So, if you’re not in a rush to get started – building your savings may be the best option.

If you want to open a savings account for your renovation project, we’re here to help!* Contact us or stop by your local branch to speak with a representative.

Consider your loan options

There are a variety of loan options out there to assist in financing your remodeling project. Here are a few to consider, all of which are available here at First Financial!

  • Home improvement loans: This type of loan is an unsecured personal loan that doesn’t need to use your home as collateral to qualify. Lenders will use your credit score to determine your interest rate and qualifications.**
  • Home equity loans: Similar to a home improvement loan, home equity loans are paid out in a lump sum that you can repay overtime in regular fixed monthly payments.***
  • Home equity line of credit (HELOC): A HELOC is a secure loan backed by your home allowing you to qualify for lower interest rates. Our HELOCs have a maximum borrow amount of $75,000 and an LTV of up to 70%, and allow you to advance from your approved credit line as you need it. ++

Use a credit card

For smaller home improvements, credit cards with a lower interest rate may be a good option, especially if you can find a card with added perks. At First Financial, we offer 4 credit card options that each have benefits like a 10-day grace period and no annual fees.+ Our Visa Platinum and Signature Cash Plus cards, for example – offer UChoose Rewards on all purchases that are redeemable for travel, merchandise, gift cards, and cash back.

If you’re still unsure what would be the best route for financing your home improvement project, you can rest assured knowing our financial experts are happy to give you advice based on your situation. Contact us to get started, or stop in to your local branch to speak with a representative today!

 

*A $5 deposit in a base savings account is required for credit union membership before opening any other account/loan. All personal memberships are part of the Rewards First program and a $5 per month non-participation fee is charged to the base savings account for memberships not meeting the minimum requirements of the program. Click here to view full Rewards First program details. Some restrictions apply, contact the Credit Union for more information.

 **Available on primary residence only. A First Financial membership is required to obtain a Home Improvement Loan and is open to anyone who lives, works, worships, volunteers, or attends school in Monmouth of Ocean Counties. See credit union for details. Rate will vary based off of applicant’s credit rating. Not all applicants who apply will be approved, subject to underwriting guidelines and credit approval. Lien position and appraisal valuation may affect the maximum loan amount. Not all applicants will qualify for maximum Loan to Value (LTV) ratio. It will be based off of creditworthiness, property type, occupancy, lien position, and loan amount. Rates will be affected by LTV or combined LTV if there is another lien on the property. Loan amounts over $7,500.00 will be required to give First Financial FCU a security interest in their property. Rates will vary based off of lien position and whether the loan is mortgage secured or unsecured. For mortgage secured Home Improvement loans First Financial FCU (FFFCU) will waive closing costs at inception of loan. If loan is terminated within the first 2 years of opening, closing cost waiver is revoked and are required to be paid back by member to FFFCU.

 ***First Financial FCU (FFFCU) will waive closing costs at inception of loan. If loan is terminated within the first 2 years of opening, closing cost waiver is revoked and the borrower(s) will be required to pay back closing costs in full to FFFCU. A First Financial membership is required to obtain a Home Equity Loan, and is open to anyone who lives, works, worships, volunteers or attends school in Monmouth or Ocean Counties. See FFFCU for details or visit firstffcu.com for all current rates. Rates for financing up to 80% of Appraised Value less other Mortgages.

 +APR varies from 11.15% to 18% for the Visa Simply First Platinum Card and from 13.15% to 18% for the Visa Signature Cash Plus, Visa Platinum Cash Plus and Visa First Step Cards when you open your account based on your credit worthiness. These APRs are for purchases and will vary with the market based on the Prime Rate. Subject to credit approval. Rates quoted assume excellent borrower credit history. Your actual APR may vary based on your state of residence, approved loan amount, applicable discounts and your credit history. No Annual Fees. Other fees that apply: Balance Transfer and Cash Advance Fees of 3% or $10, whichever is greater; Late Payment Fee of $29, $10 Card Replacement Fee, and Returned Payment Fee of $29. A First Financial membership is required to obtain a Visa Credit Card and is available to anyone who lives, works, worships, volunteers, or attends school in Monmouth or Ocean Counties.

++ LTV= Loan to Value Ratio. Rates will vary with the market based on Prime Rate and may change quarterly. Subject to credit approval. Available on primary or secondary homes only. A First Financial membership is required to obtain a home equity line of credit, and is open to anyone who lives, works, worships, volunteers or attends school in Monmouth or Ocean Counties. Subject to underwriting guidelines. See credit union for details. 

Looking to Buy Your First Home? Here’s Where to Start

Buying a home is one of the biggest decisions you’ll ever make. However, don’t let that scare you. While purchasing a home is a big deal that will ultimately help shape your future, it’s also an excellent investment. The value of most homes increases over time and may come along with helpful tax benefits too. As a potential new homeowner, there’s a lot to learn about the home buying process and we’re here to help! Here are some useful tips for first-time home buyers.

Figure out what you can afford

Before you start house hunting, you’ll need to know what your budget is. Our loan officers can help you determine a price range through a pre-qualification process, which involves using financial information to get an estimate of the maximum mortgage you should be able to obtain. As a rule of thumb, we recommend your monthly house payment be about 30% of your total monthly gross income. Our mortgage calculator can also help you determine your monthly payments as you plan out your budget.

Make a wish list for your dream home

Now, this is the fun part! Before creating a home wish list, ask yourself, “Where do I see myself in the next 5 to 10 years or longer?” Having a vision for you and your family will help put the details of your dream home into perspective. With this in mind, you’ll need to figure out the must-haves of your ideal home, including backyard requirements, size of the home, and neighborhood. All of these factors will have an impact on the overall cost of your home and whether or not it fits your budget.

Find the right mortgage

Many lenders offer a variety of home financing options to choose from. The type of mortgage you end up using will affect what you’ll need to qualify for the loan, and how you’ll pay it back. That’s why it’s important to understand your options before making a decision.

Here are the main types of mortgages that are out there:

  • Conventional: This mortgage is a typical home loan contract between the lender and the borrower, at the lender’s risk. The borrower’s property is security, which means the lender can take your home for non-payment of the mortgage. Conventional mortgages are the most common type of mortgage loan (averaging about three quarters of U.S. mortgages).
  • FHA (Federal Housing Administration): The FHA will insure the loan for the lender against loss, in case the buyer cannot make payments. This mortgage requires the buyer to carry mortgage insurance through the FHA.
  • VA (Veterans Administration): These home loans are backed by the federal government and offered by private lenders to qualified members of the armed forces, active military personnel, veterans, or their widows.
  • Adjustable Rate Mortgage (ARM): The interest on an ARM may vary up or down based on the market. ARMs often offer a lower beginning interest rate. However, this rate will go up over time.
  • Fixed Rate Mortgage: The interest rate on this agreement stays the same for as long as you hold your mortgage, no matter how interest rates change in the financial markets.

When it comes to understanding your financing options, we recommend consulting with one of our mortgage experts to learn more about the mortgage process.

Work with a realtor

The home buying process is already stressful enough, so why not take some of the work off your plate? A realtor can help you save time by pre-selecting homes within your price range and requirements. Not to mention – they’ll be fully immersed in market trends, tax information, and area considerations like school districts. As you get closer to purchasing a home, they will be your go-to for handling negotiations and arranging for a home inspection and appraisal. Once you’re ready to make an offer on a home, they can help with that too.

There are many important steps to the home buying process, even after your offer has been approved. Rest assured knowing a First Financial mortgage expert is here to help you along the way, should you be looking to purchase a home in Monmouth or Ocean Counties, NJ.*

Are you ready to get started? Apply for a mortgage loan today, call our Loan Department at 732.312.1500 Option 4, or visit a First Financial branch. Also be sure to check out our home buyer’s guide to help you through the research and application process.

Happy home buying!

*APR = Annual Percentage Rate. Subject to credit approval. Credit worthiness determines your APR. Rates quoted assume excellent borrower credit history and are for qualified borrowers. Your actual APR may vary based on your state of residence, approved loan amount, applicable discounts and your credit history. Higher rates may apply depending on terms of loan and credit worthiness. Available on primary residence only. The Interest Rates, Annual Percentage Rate (APR), and fees are based on current market rates, are for informational purposes only. Mortgage insurance may be required depending on loan guidelines. This is not a credit decision or a commitment to lend. If mortgage insurance is required, the mortgage insurance premium could increase the APR and the monthly mortgage payment. See Credit Union for details. A First Financial membership is required to obtain a Mortgage and is open to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties.

Renting vs. Owning – What’s the Right Move?

There are many reasons why people may choose to rent rather than own a home. Some renters simply like the idea of living in a temporary place as they are still unsure if they want to settle down there permanently, while others want to avoid the many expenses of home ownership.

However, the major downside to renting is that you’re giving money to your landlord every month – money that you’ll unfortunately never get back and it won’t help you build equity.

In contrast, paying for a mortgage each month may be costly, but will slowly reduce your home loan balance over time. You’ll also get to own the house, which is an incredibly valuable asset nowadays.

If you’re deciding if you should continue renting or if now would be the best time to start owning a home, then you’ve come to the right place. With the way rent continues to increase each year, you might find the latter option is better for you.

Rent Prices Continue to Increase

According to a report by Realtor.com, the official website of the National Association of Realtors – the median rent amount in the 50 biggest metro areas was $1,575 per month. The data suggests that rent amounts rose by 8.1% from the previous year, translating to an extra $118 to pay each month.

Realtor.com also revealed that rent amounts for all unit sizes are currently at an all-time high. Renting a studio apartment increased by 4%, while 1-bedroom and 2-bedroom apartments saw an 8% and 10.2% rise in rent, respectively.

Is Renting Still a Good Idea?

If you aren’t yet sure if you want to settle down, then continuing to rent might be a good idea until you can map out your future a bit more. Many people are still not sure whether they want to move out or stay due to the ongoing COVID-19 pandemic, so if you’re not yet ready to make such a permanent move – that’s quite understandable.

However, for those who are interested in acquiring a place they can own – waiting for the lease to expire and looking for a house to buy could be the ideal move. This way, you can start investing your money toward a valuable asset that will have your name in the title.

To help you decide if now would be a good time to buy a home, you should consider the following questions:

  • Do I have the money to make a down payment?
  • Is my credit score acceptable enough to apply for a mortgage loan?
  • Do I have any debt and, if so – how much more can I afford?

It’s important to ask yourself these questions before purchasing a property.

Conclusion

The cost of renting a place to live continues to increase every year, which makes it more and more impractical to continue doing so. If you believe that now is the right time to own a home, then you might consider applying for a mortgage. When you buy a home, you’ll often be able to save money in the long run that would have otherwise been used on rent (which doesn’t provide you with any equity or a long-term investment).

At First Financial, we can help you get pre-approved for a mortgage so you can know right away if owning a home is the right move for you.*

Contact us today with any questions or visit our website to learn more.

*APR = Annual Percentage Rate. Subject to credit approval. Credit worthiness determines your APR. Rates quoted assume excellent borrower credit history and are for qualified borrowers. Your actual APR may vary based on your state of residence, approved loan amount, applicable discounts and your credit history. Higher rates may apply depending on terms of loan and credit worthiness. Available on primary residence only. The Interest Rates, Annual Percentage Rate (APR), and fees are based on current market rates, are for informational purposes only. Mortgage insurance may be required depending on loan guidelines. This is not a credit decision or a commitment to lend. If mortgage insurance is required, the mortgage insurance premium could increase the APR and the monthly mortgage payment. See Credit Union for details. A First Financial membership is required to obtain a Mortgage and is open to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties. 

Tips for Buying a Home in the Current Housing Market

If you are currently in the market for a home, you are probably well aware that the nationwide housing inventory is at a record low, and the shortage is causing a problem for many prospective buyers. The current market can even create problems for sellers, because sellers still need to live somewhere after they sell their home. Between bidding wars, cash purchases, and low available inventory – here are a few strategies to help you navigate the current housing market.

Know where you stand. Being aware of your credit score, borrowing power, and housing budget is the key to security in today’s market. Sit down with your lender, financial planner, or real estate agent to talk about realistically, what can you afford. It’s especially important to know exactly how high you can go in a bidding war, because homes are often selling above value and at record speed.

Get expert advice. A real estate agent familiar with the current housing market conditions can advise you when homes you’re looking at are priced too high, and provide tips and leads you normally wouldn’t be able to get on your own. Agents who are familiar with your target neighborhood may know of possible pocket listings too – homeowners who may want to sell without putting their house on the market. In these instances, you may be able to get a home before the competition ever finds out.

Be first in line. The competition is definitely heating up these days. If you want a home badly enough, you’ll have to be ready to put in an offer as soon as the home is listed. Even if the seller decides to let the public bid on their home, if you’re prepared – you’ll get a chance to tour the home as soon as it’s listed if your buyer’s agent is active in the local area, and be one of the first bids in.

Get pre-qualified by your lender before you shop. Having pre-qualification paperwork to present when you place your offer is impressive to a seller and will get you a step ahead of the process in normal market conditions. In today’s market, having proof that you can afford the home you are bidding on is the bare minimum. Right now being pre-approved for a certain amount is very important in terms of competing offers. You’ll also want to be sure you can provide proof of where the down payment is coming from too.

Show that you want it, but don’t get too caught up in a bidding war. It’s tempting to keep placing higher counter offers if you’re outbid on a house that you love, but don’t let your emotions get the best of you. Stick to your budget and it’s okay to bow out if bids increase drastically above value. You can also send a letter to the owner as well. This tactic frequently works. Sellers are often emotionally attached to their homes and memories they’ve made in it, so it may help your offer get selected by letting them know just how much the home would mean to you and your family.

In the end, you may just have to be patient and try not to get discouraged. You don’t want to get stuck with a mortgage you can’t afford either, and eventually – the housing market will normalize again. When that does happen, you’ll be happy you held out for a home you could comfortably afford.

When you’re ready to take that leap – come talk to First Financial. Take advantage of our great mortgage and refinance rates, easy application process, and we’ll help you get pre-qualified before you shop.* Give our lenders a call, they’ll be happy to answer your questions with no commitment required!

*Subject to credit approval. Credit worthiness determines your APR. Rates quoted assume excellent borrower credit history and are for qualified borrowers. Your actual APR may vary based on your state of residence, approved loan amount, applicable discounts and your credit history. Higher rates may apply depending on terms of loan and credit worthiness. Available on primary residence only. The Interest Rates, Annual Percentage Rate (APR), and fees are based on current market rates, are for informational purposes only. Mortgage insurance may be required depending on loan guidelines. This is not a credit decision or a commitment to lend. If mortgage insurance is required, the mortgage insurance premium could increase the APR and the monthly mortgage payment. See Credit Union for details. A First Financial membership is required to obtain a mortgage and is open to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties.

Article Source: Moneyning.com

Questions to Ask Before Deciding to Refinance Your Mortgage

With the mortgage market the way it has been lately, have you been thinking about refinancing? Before you make an appointment with your lender, take the time to ask yourself the following five questions. This will help you decide if refinancing is a good idea or if it might turn into a financial problem down the road.

Why do you want to refinance?

Many borrowers contemplate refinancing to extend their loan for another 30 years to reduce their monthly mortgage payment. Another group who might want to refinance are those who bought their homes under an adjustable rate mortgage (ARM). These mortgage loans have an initial period of a fixed interest rate and then a floating rate that changes based on market conditions, so it’s sometimes best to refinance before that initial rate is set to fluctuate in an effort to manage the monthly mortgage bill. By refinancing, an ARM borrower will be able to either change to a fixed rate mortgage or extend their initial fixed rate.

How will you know if this is the right choice for you? Ask yourself if the benefit of a lower interest rate mortgage and possible lower monthly payments will be worth the cost after closing fees are added in. Closing costs can sometimes be upwards of 2% of the total loan amount, so you’ll need to do some math and figure out how long it might take you to pay that back and if refinancing is worth it.

How long will you stay in the house?

If you might be moving within the next few years, it most likely won’t make sense financially to refinance. Here’s an example: You’d like to refinance your $250,000 mortgage and you’ll pay 2% in closing costs. That’s $5,000 you have to make up so that the refinance process worth the effort. If your monthly mortgage payment is only reduced by $200, it would take you two years to make up the closing costs alone – and that’s not even factoring in that the mortgage has been extended out another 30 years.

If you plan to stay in your current home for years to come, then refinancing would most likely make sense over the long run. If you don’t think you will be in your current home in the next couple years, it might be best to hold off on refinancing for now.

How much equity do you have in your home?

If you still owe more than 80% of your home’s value, refinancing probably won’t make financial sense for you. If you currently have home equity loans, you will also need to pay them down before you look into refinancing. Otherwise, your rate and payment will be affected and most likely won’t be as low as it could possibly be – which would defeat the purpose of refinancing.

On the other hand, it’s a smart idea to refinance if you put less than 20% down when you bought the home and you now qualify to take out a mortgage with 20% or more in home equity built up. This would happen as you pay down the mortgage over the years, or due to home appreciation. When you have 20% or more in home equity, you will also eliminate your private mortgage insurance (PMI) payment. Refinancing with enough home equity can eliminate this monthly fee altogether!

How is your credit score?

If your credit score decreased since your original mortgage, refinancing would not be a good idea. A dip in credit will affect the rate you will qualify for or you may not even qualify at all. If your credit score isn’t the greatest, wait to build it back up before applying to refinance your mortgage.

Are you trying to get out of debt?

For those facing large credit card debt or medical bills, refinancing with a cash-out option (where you borrow more than the amount of your mortgage and take the extra in cash), may seem like a great idea. Technically, you can use the lower interest rate funds from the refinance to pay off your higher rate interest bills, and pay off your debt.

However, this usually only works for those who are disciplined, have adequate income to continue to pay off the debt, and fell on hard times temporarily. Even if you don’t run up your credit cards ever again, you are potentially spreading this new obligation to 30 years by adding it onto your new mortgage. You might have a smaller monthly payment, but if it takes you the full 30 years to pay off the refinanced mortgage – you’ll owe 30 years of interest built in as well. This is definitely something to consider and you’ll want to really do your research before you consider the cash-out refinance option.

In the end, not everyone will benefit from refinancing their mortgage. If you are considering it, be sure to answer the five questions above to know if refinancing is the right financial step for you. Questions about refinancing? Contact the Loan Department at First Financial, and we’ll help you decide between your options with personalized service.*

*APR = Annual Percentage Rate. Subject to credit approval. Credit worthiness determines your APR. Rates quoted assume excellent borrower credit history and are for qualified borrowers. Your actual APR may vary based on your state of residence, approved loan amount, applicable discounts and your credit history. Higher rates may apply depending on terms of loan and credit worthiness. Available on primary residence only. The Interest Rates, Annual Percentage Rate (APR), and fees are based on current market rates, are for informational purposes only, are subject to change without notice and may be adjusted based on several factors including, but not limited to, property location, loan amount, loan type, occupancy, property type, loan to value, debt to income ratios, FICO credit scores, refinance with cash out and other variables. Mortgage insurance may be required depending on loan guidelines. This is not a credit decision or a commitment to lend. If mortgage insurance is required, the mortgage insurance premium could increase the APR and the monthly mortgage payment. See Credit Union for details. A First Financial membership is required to obtain a mortgage and is open to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties. 

Article Source: Moneyning.com