Bryan Vogt's Metro East Illinois Real Estate Blog: December 2009

WHEN IT IS A GOOD TIME TO REFINANCE

Whatever you decide is the best option for you today may change as economic conditions or your personal circumstances change in the future. So how so I know when it is a good time to refinance?

Whether or not you should refinance usually depends on three things: what you think interest rates will do in the future, how much monthly savings you'll enjoy, and how long you expect to be in your home.

Refinancing is not something you consider lightly because it can be expensive. The total cost of your loan can rise as much as five percent when you add the up-front fees and costs.

A good rule of thumb is to start looking into refinancing when interest rates drop 1 to 1 1/2 points below what you are already paying. The reason is that some lenders offer loans that cost little or nothing at all. As soon as interest rates drop blow your rate , start talking to your agent or loan broker.

Next figure out what you will pay up front. then calculate your savings. With these two numbers you can figure out how long it willl take to cover the cost of the new loan. For example, if refinancing costs you $5000 up front and saves you $200 a month in mortgage payments, it will take 25 months to cover your costs. If you are not planning to move for several years, refinancing makes alot of sense. If you are going to look for a new home in two years, you won't really be around long enough to reap the benefits. In fact you would lose money in this situation.

If you refinance today and rates drop even further in the next months, you will miss out on additional savings. If you refinance to save $10 to $20 off your mortgage payment then you will have to stay in your home forever to see it pay off.

Warning: The math is easy for fixed rate loans, not so easy when you are talking about ARMs. If you don't feel comfortable rumnning hte numbers yourself, ask your lender or Realtor for help.

Bryan Vogt
Strano & Associates, Realtors® - GMAC Real Estate
(618) 355-5824
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O'Fallon IL Real Estate, Condos, Homes for Sale
Swansea IL Real Estate, Condos, Homes for Sale
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Scott AFB PCS Relocation
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INTERMEDIATE FIXED MORTGAGES Bryan Vogt

These are a family of 20 or 30 year loans that are fixed for a set amount of time, such as 5 to 7 years, then they readjust once for the remainder of the loan. This readjustment is based on a predetermined index. Some may refer to these as "balloon" mortgages,but this term is falling out of favor because of the negative connotations associated with the balloon mortgages of the past which were fixed for 5-7 years, at which time the entire balance of the loan became due.

Today, they are more commonly known as intermediate fixed loans or extended balloon mortgages. Some of these loans are not for the faint hearted. You enjoy the fixed payments from one to seven years,and then the loan readjusts,as long as certain conditions are met, such as interest rates have not risen more than five percentage points, you haven't made any late payments in the previous twelve months, etc. If conditions are not met, there are no guarantees, so beware. It is best to consult your Realtor or loan officer if you have questions regarding these loans.

If you are a first time home buyer who plans to trade up before the loan comes due, you might want to consider a balloon mortgage in order to have lower monthly payments. Be sure to get all stipulations in writing and review them carefully. There is a family of intermediate loans that are similar to these balloon mortgages, but when they become due after 5 to 7 years, they adjust and become variable rate loans. They also do not carry the rigid stipulations that balloon loans carry, making them a little easier to live with if you move before the loan is due.

There are various other loan types including roll-overs, wraparounds, zero interest rate mortgages and buy downs, but the ones I have listed here are most common. If you decided to opt for something more exotic. discuss it with your Realtor and loan officer carefully to make sure you know what you are getting yourself into. If you get in over your head and can't meet your obligations, you could end up losing your home and doing serious damage to your credit.

Strano & Associates, Realtors® - GMAC Real Estate
(618) 355-5824
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O'Fallon IL Real Estate, Condos, Homes for Sale
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FIXED RATE MORTGAGES

People usually opt for a fixed rate loan for the security it offers. You know exactly what you will be paying monthly for the life of the loan. If interest rates fall, you can refinance at a lower rate. Lenders are offering loan programs based on fixed rates, such as lower down payments;that is five percent down or less. Adjustable rate loans generally require a larger down payment. The most common fixed rate loans are for terms of 15 or 30 years. If you can afford the shorter term, it is a good way to build equity fast and save tens of thousands of dollars over the lifetime of the loan. However, I can show you how it will be more savvy to go with the 30 year fixed and pay an extra payment each month above and beyond your established mortgage payment. Just be sure to indicate your extra payment is for principal paydown only, not interest. This way you could pay off your mortgage sooner than 15 years and save ten of thousands of dollars. You will also have the "safety net" of paying you lower established mortgage payment should things become tight one month.

Fixed rate mortgages make the most sense when interest rates a low and if you are planning to stay put for the next seven or more years. They offer safety to people on fixed incomes who might not be able to afford a rising housing bill. If you need to lock in your level and can afford the monthly payments, consider a fixed rate loan.

Lets say you are working for a large company and making a good salary. You are comfortable and the job security is good but not much chance of further advancement. In other words, you do not anticipate moving anywhere else in the forseeable future, you want to avoid the possibility of higher house payments down the road.

A fixed rate,long term mortgage makes sense in this situation. Although you are probably paying one or two percentage points more than an adjustable loan, you also have the security of a fixed payment each month. If interest rates drop three or more points,you can refinance at a lower rate.


Bryan Vogt
Strano & Associates, Realtors® - GMAC Real Estate
(618) 355-5824
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O'Fallon IL Real Estate, Condos, Homes for Sale
Swansea IL Real Estate, Condos, Homes for Sale
Bellville IL Real Estate, Condos, Homes for Sale
Scott AFB PCS Relocation
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WHICH LOAN IS RIGHT FOR YOU?

Adjustable. Fixed. Balloon. It is easy to get lost in mortgage verbage. Here is a rundown of the most common loans.

ADJUSTABLE RATE MORTGAGES - Your interest rate (and monthly payment) rises and falls with the index to which it is tied. Because they start out two to three percentage points below fixed rate mortgages, they are particularly popular when fixed rates are high. To protect you against interest rate hikes, the best loans put a cap on annual rate increases of two percentage points a year, with a lifetime increase of no more than five percentage points above where you began.

The most popular ARM indexes are those linked to three month, six month, and one year Treasury Bills, the 11th District Cost of Funds(COFI), the prime rate and the London Interbank Offer Rate(LIBOR).

As a rule, ARMS make more sense if you don't plan on staying in your home longer than five years at most. Which index is good for you depends on two things: economic forecast and your personal comfort level.

Libor and T-Bill indexes, for example, react more immediately to changes in the economy, a good thing when interest rates go down, not so good when they rise. Whatever happens, you will see it pretty quickly in your monthly payment.

More conservative buyers prefer indexes linked to the prime rate or the COFI because they more stable and move up or down more slowly than other indexes. That is good when rates are low and rising, less so when they are high and dropping.

Is an ARM good for you? Well, If you need a lower monthly payment to afford the home you want and you are planning to stay less than three to five years, then yes. But make sure you can handle the higher payments that might come down the road. A prudent approach is to always plan financially for the "worst case" scenario: Assume that your loan will always rise the maximum amount. If you wouldn't be able to afford it, then consider another loan.You know your own personal comfort level. Use it to make your decision.


Bryan Vogt
Strano & Associates, Realtors® - GMAC Real Estate
(618) 355-5824
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O'Fallon IL Real Estate, Condos, Homes for Sale
Swansea IL Real Estate, Condos, Homes for Sale
Bellville IL Real Estate, Condos, Homes for Sale
Scott AFB PCS Relocation
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WHAT A REALTOR CAN DO FOR YOU

If you are using a Realtor to help you find a home, ask to be put in touch with a lender he or she works with on a regular basis. In most cases you Realtor is not a loan officer, but it is his or her job to help people to buy and sell homes. A good real estate professional has long-standing relationships with home mortgage professionals and can point you in the right direction to answer any questions you may have. He or she also can share insights into what they have seen work - or not work - for others in situations similar to yours.


Bryan Vogt
Strano & Associates, Realtors® - GMAC Real Estate
(618) 355-5824
---
O'Fallon IL Real Estate, Condos, Homes for Sale
Swansea IL Real Estate, Condos, Homes for Sale
Bellville IL Real Estate, Condos, Homes for Sale
Scott AFB PCS Relocation
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MLS# 2916095 $176000
Welcome to this immaculate, airy, three bedroom ranch home. The floor plan and vaulted ceiling gives it an immediate feeling of space and invites you to come in and enjoy what it has to offer. This split bedroom concept is popular and there are two finished rooms in the basement. The master bath has a garden tub with separate shower and double sinks. Atrium doors lead out to the roomy deck and fenced backyard. Entertaining family and/or friends will be a pleasure in this home.
http://bryanvogt.com.idxre.com/idx/listings.cfm?cid=4294&pc=MLS&sr=1&gsr=1&sb=pd


Bryan Vogt
Strano & Associates, Realtors® - GMAC Real Estate
(618) 355-5824
---
O'Fallon IL Real Estate, Condos, Homes for Sale
Swansea IL Real Estate, Condos, Homes for Sale
Bellville IL Real Estate, Condos, Homes for Sale
Scott AFB PCS Relocation
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MLS# 2913772 NEW PRICE!!!

$115,000

Anyone looking for an attractive, meticulously kept ranch home will love this one. The great room with its cathedral ceiling gives the room that spacious feel and for those cold winter evenings the gas fireplace makes it warm and inviting. The bright, cheery kitchen has a large eating area that over looks the generous back yard, accessed by a sliding door. The open floor plan is great for entertaining and sharing time with family and friends.

http://bryanvogt.com.idxre.com/idx/listings.cfm?cid=4294&pc=MLS&sr=1&gsr=1&sb=pd

Bryan Vogt
Strano & Associates, Realtors® - GMAC Real Estate
(618) 355-5824
---
O'Fallon IL Real Estate, Condos, Homes for Sale
Swansea IL Real Estate, Condos, Homes for Sale
Bellville IL Real Estate, Condos, Homes for Sale
Scott AFB PCS Relocation
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$195,000 MLS# 2915879

102 Bramblewood Ct., Belleville, Il





Plenty of room for family and/or friends in this lovely 4 bedroom 3 bathroom home. If you feel you need more space, there is a full unfinished basement with a rough in for a bath available. The large rooms flow nicely into one another with this open floor plan. The kitchen ,with an island equipped with a breakfast bar, says…come in and spend some time. It adjoins an eating area with access to the privacy fenced backyard. A brick, gas fireplace in the family room creates a cozy atmosphere on those cold winter nights. The master bedroom has a vaulted ceiling, large walk-in closet, and the spacious master bath has a jetted tub and separate shower. A covered front porch invites you to sit and enjoy those comfortable days or evenings.


http://bryanvogt.com.idxre.com/idx/listings.cfm?cid=4294&pc=MLS&sr=1&gsr=1&sb=pd

Bryan Vogt
Strano & Associates, Realtors® - GMAC Real Estate
(618) 355-5824
---
O'Fallon IL Real Estate, Condos, Homes for Sale
Swansea IL Real Estate, Condos, Homes for Sale
Bellville IL Real Estate, Condos, Homes for Sale
Scott AFB PCS Relocation
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Labels: 2 story, Belleville, country

SHOPPING FOR A MORTGAGE LENDER

There are several potential lenders in today's marketplace. They include:

Mortgage Banks - A mortgage banker is a direct lender. He or she qualifies applicants, finds the best available loan and funds it. Because this is their main business, mortgage banks can offer very competitive rates but are not necessarily the cheapest.

Mortgage Brokers - Brokers don't lend money; they find lenders for a fee in addition to the traditional application and processing costs. While a good broker might be able to find you the cheapest mortgage, make sure the fee doesn't offset any savings. Since most brokers' fees are paid by the lender in the form of a commission their services can cost you nothing - that is, no out of pocket costs. Something also to remember - a mortgage broker is the legal agent of his or her client and does not work for the lending institution. So the mortgage broker will have access to the widest spectrum of loan options - whereas a bank or savings and loan representative will draw from only "in house" loan options. Going by this information, a reputable mortgage broker would most likely be your cheapest source for home loans and refinancing.

Savings and Loans - Once the primary source of home financing, savings and loans hold a much smaller piece of the market today. Some experts recommend checking their offers before looking at a bank.

Banks - Commercial banks have come on strong in the recent years. Some have made home loans a significant part of their business.

Credit Unions - A good source often overlooked by borrowers. Credit unions function like brokers because they generally don't lend their own money.

Whichever route you untimately take, be sure to shop around. What lenders charge might differ by as much as two or three percentage points. That is pretty significant when you look at the impact on a 30 year fixed mortgage - depending on the size of the loan, the difference could be a few hundred dollars a month!


Bryan Vogt
Strano & Associates, Realtors® - GMAC Real Estate
(618) 355-5824
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O'Fallon IL Real Estate, Condos, Homes for Sale
Swansea IL Real Estate, Condos, Homes for Sale
Bellville IL Real Estate, Condos, Homes for Sale
Scott AFB PCS Relocation
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AVOID UNPLEASANT SURPRISES

Talk to your Realtor or loan officer about checking you credit history prior to applying for a mortgage. There is no reason to waste time amd money in the application process if you have credit problems that will cause you to be rejected. Once you know about any potential problems, you can work on clearing them up before you apply.

Bryan Vogt
Strano & Associates, Realtors® - GMAC Real Estate
(618) 355-5824
---
O'Fallon IL Real Estate, Condos, Homes for Sale
Swansea IL Real Estate, Condos, Homes for Sale
Bellville IL Real Estate, Condos, Homes for Sale
Scott AFB PCS Relocation
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FIRST THINGS FIRST - KNOW WHAT YOU CAN AFFORD

You can save yourself a lot of time and trouble if you take a few minutes to figure out a loan amount you can afford. The general guidelines are:

• No more than 28 percent of your gross monthly income should be spent on housing expenses (prinicipal, interest, insurance and taxes). This can vary upwards if you have a good credit history, liquid assets, or if you are already spending more than 28 percent on your housing expenses.
• Your total debt (mortgage and consumer debt) shouldn't exceed 36 percent of gross monthly income. Again, people with good credit and liquid assets can often creep above this line.

As you compare your income to your potentiel housing expenses, keep in mind that your mortgage principal and interest are not your only costs. You will also have to allow for any association fees, property taxes, insurance payments, etc.

There are many loan programs out there, especially for first time home buyers. For your own safety and confidence down the road, your best bet is to adhere as closely as possible to the guidelines above

Bryan Vogt
Strano & Associates, Realtors® - GMAC Real Estate
(618) 355-5824
---
O'Fallon IL Real Estate, Condos, Homes for Sale
Swansea IL Real Estate, Condos, Homes for Sale
Bellville IL Real Estate, Condos, Homes for Sale
Scott AFB PCS Relocation
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AN INSIDER'S GUIDE TO UNDERSTANDING MORTAGE LOANS

There was a time in the not-so-distant past when financing the purchase of a home was relatively uncomplicated. You went to your local savings and loan and signed up for a 30 year fixed rate mortgage loan.

Those days are gone probably forever. Today, you must have what seems like and endless array of choices; different rates, terms, down payments, fees, etc. So how do you pick the combination that makes the most sense for you?

Having spent many years helping buyer to understand the ins and outs of financing a home, I have developed this guide to assist you in evaluating which mortgage is best for you. More than any other single factor, choosing the right mortgage will influence whether or not your investment is a good one. Let's say that you get a great price on a home, but you end up with a mortgage that has high fees and interest rate. You could see the money you saved would disappear in a very short time.

Keep in mind that a great mortgage for one person may be terrible for you. Each of us has different circumstances that determine whether a particular loan is a good deal or not.; whether you are just starting out or nearing retirement, how secure your job is, how long you plan to be in the home, etc. You can be sure that the best loan for a first time homebuyer planning to move up in five years is quite different from the best loan for a couple who is staying for the next 20 years.


Bryan Vogt
Strano & Associates, Realtors® - GMAC Real Estate
(618) 355-5824
---
O'Fallon IL Real Estate, Condos, Homes for Sale
Swansea IL Real Estate, Condos, Homes for Sale
Bellville IL Real Estate, Condos, Homes for Sale
Scott AFB PCS Relocation
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Labels: financing, loans, mortgege

A FEW CLOSING THOUGHTS

Whether it is your first home or you have been through the process many times, buying a house is always a major investment. If you are like most people, your home will have a significant impact on your financial future. Just as importantly, your house needs to be a "home"; a place where you and your family feel comfortable and can truly enjoy life. I know how important my home is to me, and that is why I want to ensure you that you are informed and prepared before you make your next move.

Armed with the advice in this report, you can avoid the costly pitfalls and make the most of your investment. I wish you the best of luck and, as always, invite you to call on me for any and all real estate queations or needs.

Bryan Vogt
Strano & Associates, Realtors® - GMAC Real Estate
(618) 355-5824
---
O'Fallon IL Real Estate, Condos, Homes for Sale
Swansea IL Real Estate, Condos, Homes for Sale
Bellville IL Real Estate, Condos, Homes for Sale
Scott AFB PCS Relocation
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