Chicago's North Shore - North and Northwest Suburbs Real Estate Archive

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Did Your Lender Sell Your Mortgage?

by Allyson Hoffman

While it's not uncommon for mortgages to be sold, many homeowners are surprised when this occurs.  Like other financial commodities, home loans are bought and sold on the free market like stocks and bonds. When a mortgage is sold to another financial institution, it generally triggers the servicing also transferring with payments ultimately being directed to a new vendor.  But what else, if anything, does this mean to you?

Here’s what you might expect when you get the news. These typically seamless transactions rarely cause problems but should you encounter any issues as a current homeowner, it’s important to understand of your rights and what has transpired.

It’s likely that you received a statement when you closed on your home (or refinanced) which noted the possibility for your loan to be sold during its term to another lender. Should that occur, then federal mandates require both the seller and the buyer of your mortgage note to notify you of the pending and closed sales.

With ample notice prior to your next payments due date, your current lender must alert you to the change in writing and provide you complete contact information including the company name, physical address, phone number and account manager of the new servicer.  Additionally, the servicer buying your loan is required to provide this information to you as well. Both should provide a direct link to a person you can contact with questions, not just an automated system.

By giving you the right to ask questions about the status of your loan and receive prompt answer, these requirements protect you from mortgage scams such as those directing you to send payments to an unknown entity.  In addition, you are typically protected from any delinquency status for 60 days during the transition.

Feel free to contact me if you have any questions about buying or selling a home and should you be interested in financing options, I will gladly direct you to trusted, experienced mortgage professionals who can provide additional information about what to expect if your mortgage is ultimately sold.

 

 

Allyson Hoffman, ABR, ACRE, CDPE, CRS, e-PRO, GRI, SFR, SRES
RE
/MAX Villager
Serving Chicago's North Shore, North and Northwest Suburbs
847-310-5300

[email protected]

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Allyson Hoffman is your ultimate real estate resource for Chicago's North Shore, North and Northwest Suburbs and surrounding areas. Visit my website for detailed information regarding today’s real estate markets.

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15 Year versus 30 Year Mortgages -- The Pros & Cons

by Allyson Hoffman

A home is one of the biggest purchases most folks will ever make. So, if you’re like most people, you’ll need a mortgage to buy it.

Because there are several available options for mortgage loans, buyers frequently wrestle between choosing a common 30-year loan, or alternately, a 15-year mortgage with a faster payoff schedule.  Both choices have plusses and minuses. Hence, before deciding on the best program to select, take a look at these facts.

A 30-year mortgage offers flexibility.  Monthly payments are lower, because they are spread out over 360 months. If you should unfortunately become ill, lose your job, or have other financial difficulties, you are less likely to be challenged by the commitment to pay your mortgage. Moreover, if you want to accelerate the payoff of your mortgage, you can simply elect to pay extra each month to reduce your loan principal or make extra principal payments whenever your cash flow comfortably permits.

However, keep in mind that a 30-year mortgage generally carries a higher interest rate than a 15-year loan because the bank assumes a much longer risk with 30-year borrowers. Therefore, 30-year borrowers often still pay more interest as a result. 

On the other hand, a 15-year mortgage with a lower interest rate can save you money. The shorter term of the loan coupled with lower rates can add thousands of dollars to your pocket, a result of saved interest payments over the life of the loan.

A 15-year mortgage requires borrowers to fully amortize their loans in half the time of 30-year mortgage.  So, if you can afford the associated higher monthly payments of a 15-year loan, this might be the right alternative for you.

The downside of a 15-year mortgage includes its lack of flexibility as compared to a 30-year loan. Once you are committed to the higher payments, should future financial difficulties arise, paying less, as you would with a 30-year mortgage, is simply not an option.

Thus, to determine which mortgage path to follow, the best course is to secure a solid pre-approval for your mortgage before starting to shop for a home.  Lenders are readily available to assist with this request.  If you do not have a reputable, experienced and successful lender in mind, but would like to speak with someone who really knows the ins and outs of the mortgage arena, I can provide recommendations to trusted lender affiliates with established reputations for producing results. They can help you to determine what payments to anticipate and assess how this works for your current budget.  When the time is right to search for your next new home, please contact me today for a consultation. I will be happy to provide you additional information on the buying or selling process, help you to find a new home or determine the value of your existing property.

 


Allyson Hoffman, ABR, ACRE, CDPE, CRS, e-PRO, GRI, SFR, SRES
RE/MAX Villager
Serving Chicago's North Shore, North and Northwest Suburbs
847-310-5300
[email protected]

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Allyson Hoffman is your ultimate real estate resource for Chicago's North Shore, North and Northwest Suburbs and surrounding areas. Visit my website for detailed information regarding today’s real estate markets.

Photo courtesy Fernando Mengoni, Stock.XCHNG.

The Truth About Home Prices as Interest Rates Rise

by Allyson Hoffman

Interest rates have begun moving upward, a new concern to buyers currently searching for a home. Understanding how increasing interest rates impact the price of the home will help to determine the time to buy and how much house buyers can afford.

How Interest Rates Impact Affordability

Lower interest rates reduce the overall amount paid for a home and the monthly financial obligations. Since payments directly tie to the loan amount and therefore, the amount a buyer can be approved for, any change in interest will inevitably make a substantial difference in what type of home is affordable and potentially affect a buyer’s ability to find the house of their dreams.

For example, consider a $300,000 house mortgaged with a 4% interest rate and a loan term of 30 years. Presuming a 20% down payment ($60,000) and a loan amount of $240,000, monthly principal and interest payments would be $1,146.00. If that interest rate increased by even one percent to 5%, monthly payments would correspondingly rise to $1,288.00. This payment, based upon the higher interest rate, is nearly equal to the payments a buyer would be making if they had paid $330,000 for the same home mortgaged at 4% -- or a whopping ten percent increase in the price.

While a buyer may be comfortable affording the extra $142 per month, their lender will need to approve the loan for the higher amount as well. Depending upon a buyer’s debt-to-income ratio, this may be feasible or not.  So if you are looking at the top of your budget range, even a $100 increase in your payments could mean the difference between approval and rejection. Assess your basic payment information with online mortgage calculators.

How to Deal with Rising Interest Rates

For those actively in the market to buy a home soon, now is the time to act before rates rise further. Lower interest rates and home prices make purchasing a property more affordable.

One way to increase affordability and purchase a home priced near the top of your budget (or just over) is to pay points on your loan. Points are determined based upon the amount of your loan with each point equaling 1% of your mortgage balance. Points are treated as prepaid interest on your loan and thereby can reduce the rate offered, the associated payments required and thus, the affordability to the borrower.

In summary, when shopping for a home and selecting the right financing, pay attention to both the interest rate and the price of the property. This will help to ensure that you choose a property that fits your needs and financial capability. For additional information on the buying process or recommendations to trusted lender professionals who can assist you in determining how much you can borrow, please contact me today for a consultation. I will be happy to answer any questions you may have, and/or help you find your dream home.



Allyson Hoffman, ABR, ACRE, CDPE, CRS, e-PRO, GRI, SFR, SRES
RE/MAX Villager
Serving Chicago's North Shore, North and Northwest Suburbs
847-310-5300
[email protected]

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Allyson Hoffman is your ultimate real estate resource for Chicago's North Shore, North and Northwest Suburbs and surrounding areas. Visit my website for detailed information regarding today’s real estate markets. 
  

Image courtesy pixabay.com

Be a Power Buyer by Mastering the Pre-Qualification Process

by Allyson Hoffman

You're ready to buy a home, but do you really know how much you can afford? 

Before you set out on your new home search, it is important to know how much you your budget will bear.  This is referred to as being pre-qualified for a mortgage and can be accomplished by meeting with a prospective lender.  During the pre-qualification process you should learn the following regarding your finances such as:

      - How much home you can afford

     - The amount of down payment you will need

     - The minimum down payment and the advantages of higher down payments

     - What the bank feels you can afford for a monthly payment 

Determining this information ahead of time will also assist your real estate agent in finding the right properties for you your budget limits.

The next recommended step is to be pre-approved.  This step is more involved.  Your lender will need to review your finances in greater detail, including running your credit profile, to determine how much money they can tentatively agree to lend you for your home purchase. Your lender will review the following:

     - Gross Monthly Income

     - Credit History

     - Amount of any/all outstanding debts

     - Source and amount of money available for down payment and closing costs

     - Type of Mortgage

     - Interest Rates, etc.

Analysis of this information will allow the lender to determine two important ratios:

     - Debt-to-Income Ratio
       Your bills/debt each month should not exceed 36 percent of your gross monthly income

     - Housing Expense Ratio
       Your monthly mortgage payment should not exceed 28 to 33 percent of your gross monthly income

Though there may be some flexibility in these ratios (depending upon the lender and the type of loan program you prefer), submitting your information to your lender’s automated underwriting program for approval should provide you a greater sense of confidence in your ability to secure the financing you’ll need to reach your objective.   With a strong pre-approval in hand your offers to sellers should be better received and more likely to be seriously considered.  

For more information on the home buying process, please feel free to contact me for additional information or assistance. And for recommendations to top notch lending professionals or to discuss the buying or selling of homes in Chicago’s North Shore, North and Northwest suburbs, feel free to contact me today.  I will be happy to answer any questions you may have, help you to find a new home or determine the value of your existing property.

 

Allyson Hoffman, ABR, ACRE, CDPE, CRS, e-PRO, GRI, SFR, SRES
RE/MAX Villager
Serving Chicago's North Shore, North and Northwest Suburbs
847-310-5300
[email protected]

Get your latest Home Value
Receive Your Personalized Listing Alerts

Let’s Connect, Socially!

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Allyson Hoffman is your ultimate real estate resource for Chicago's North Shore, North and Northwest Suburbs and surrounding areas. Visit my website for detailed information regarding today’s real estate markets.

Photo Courtesy of InspiredImages/Pixabay.com

When Should You Refinance a Mortgage?

by Allyson Hoffman

Refinance a MortgageInterest rates have stayed low far longer than many experts expected and predicted. This is good news for homeowners who thought they might lose the opportunity to refinance their current mortgage. Whether your goal is to pay off your loan sooner or lower your monthly payments, a refinance could save you money and benefit your budget.

Two Main Types of Refinance Options

Homeowners primarily have two options for refinancing even if offered a wider range of products. The first option, a rate-and-term refinance, is designed to identify an affordable term and interest rate. To meet your current needs or goals, select a lower monthly payment and/or a shorter or longer payoff term.

The second refinance option, a cash-out refinance, is typically used to tap into the equity of your home for home improvements or other projects. It can also be structured to pay off other debts. The downside of choosing this type of refinance is the potential for higher payments.

How to Know When to Refinance

Because most borrowers perceive a lower interest rate and the possibility of lower payments as a good idea, be sure to consider all the factors involved before refinancing. In most cases, refinancing involves added closing costs. So be sure to compare your savings against the closing costs to assess how long it takes to break even. For instance, if your closing costs are $3,000 and you save $150 each month, it will take 20 months to break even. Therefore, make sure you plan to keep your house for at least 20 months or more.

Consider the total cost when refinancing. While a lower interest rate with potentially reduced monthly payments can be tempting, the longer payoff term may actually increase the total cost of interest paid. To find out the total cost of the home based upon your current interest rate versus the refinance rate, feel free to check an online resource at amortization calculators.

Lastly, think about your future goals, because refinancing may not make sense should you be planning to move and sell your home in the next 5 years. At your current rate, you may actually be gaining equity, which will help you when it comes time to sell.

While refinancing can be a smart decision, it’s not always the right one for every homeowner. Think through your decision and all of the repercussions before you choose this path.  For recommendations to top notch lending professionals who can assist and advise you in a potential refinance, contact me today for a list of options. I will be happy to share their contact information or answer any questions you may have about buying or selling a home.

Allyson Hoffman, ABR, ACRE, CDPE, CRS, e-PRO, GRI, SFR, SRES
RE/MAX Villager
Serving Chicago's North Shore, North and Northwest Suburbs
847-310-5300
[email protected]

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Allyson Hoffman is your ultimate real estate resource for Chicago's North Shore, North and Northwest Suburbs and surrounding areas. Visit my website for detailed information regarding today’s real estate markets.    

Image courtesy Timo Neewton-Syms/flickr.com

Applying for a Home Loan

by Allyson Hoffman

Buying a home may be the largest purchase most of us will ever make. So before you apply for a mortgage, take these steps to make sure your credit is in good shape.

First check your credit report annually for free by pulling your records from all three credit bureaus. Read them over to assure that all the information is correct. For a small fee, you can also obtain your overall credit score.

If you notice any errors on your credit report, proactively work to clear those conditions before applying for a mortgage. It should make loan processing easier, and could raise your credit score allowing you to ultimately obtain a better rate on your mortgage. Better rates typically translate into saving thousands of dollars in interest over the life of the loan, so this is definitely an important consideration.  Common credit reporting errors include payments showing as late that really weren’t, and/or bills showing as outstanding that have been paid off. Follow the credit bureau’s instructions to fix any errors you find.

To avoid any drop in your credit score, be sure to make all payments on time. If you’ve had previous late payments, you can improve your score by making all current and future payments on time. Experts also suggest that you can bump up your score a few points by paying down credit card balances and maintaining those by avoiding new purchases to those cards.

In the months before applying for a mortgage loan, don’t buy any big ticket items, like cars or furniture. Also, applying for new credit can temporarily lower your credit score. So, ideally you should not take on any new debt within a year of buying a home.

In general, your objective is to show a long, reliable credit history, so make sure you keep your oldest credit card open. Use your credit wisely, but don’t abuse it.

Shop for a home with confidence by maximizing your credit potential -- it can save you money and affect how much house you can afford.  Should you have any questions about checking your credit score or getting a mortgage pre-approval, feel free to contact me for lender references or to set up an appointment for a consultation. I’d be happy to offer you suggestions about the home buying process and introduce you to top notch mortgage originating professionals who can advise you on how to improve your score so that we can find the home of your dreams.

Allyson Hoffman, ABR, ACRE, CDPE, CRS, e-PRO, GRI, SFR, SRES
RE/MAX Villager
Serving Chicago's North Shore, North and Northwest Suburbs
847-310-5300
[email protected]

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Allyson Hoffman is your ultimate real estate resource for Chicago's North Shore, North and Northwest Suburbs and surrounding areas. Visit my website for detailed information regarding today’s real estate markets.   

Photo courtesy www.gotcredit.com/Flickr.com

Solar Panels ~ Are They Killing The Deal?

by Allyson Hoffman

The pros and cons of Solar Panels were explored in my recent previous blog. How Solar Panels could affect you or your prospective buyer's ability to finance a home is reviewed in this insightful and interesting follow-up video, courtesy of The National Real Estate Post.  Tune In now for the details and hear the warning that may be worth considering as a part of an overall decision to embrace solar power or not.

 

 

Allyson Hoffman, ABR, ACRE, CDPE, CRS, e-PRO, GRI, SFR, SRES
RE/MAX Villager
Serving Chicago's North Shore, North and Northwest Suburbs
847-310-5300
[email protected]

Get your latest Home Value
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Allyson Hoffman is your ultimate real estate resource for Chicago's North Shore, North and Northwest Suburbs and surrounding areas. Visit my website for detailed information regarding today’s real estate markets.

Refinancing with Bad Credit

by Allyson Hoffman

It's a fact of life … credit, bad or good, often controls one’s financial destiny.  So successfully mortgaging or refinancing with bad credit can be a tall order to fill.

When it comes to risk tolerance, mortgage lenders have strict guidelines.  Consequently, they’ll review your credit, your home equity and your debt-to-income ratio when assessing your ability to finance or refinance. While some lenders may extend more lenient funding, generally there are few options for borrowers with questionable credit.

A good first step to improve your potential for loan approval might include a credit review to address adverse or inaccurate entries – not the most novel idea, but a basic good practice.

If your credit shows late payments, the easy and obvious fix is to religiously pay bills on time.  Late bills or collections are devastating to your credit score.  So strive to amass some excess money each month that allows consistent on-time payments and faster reduction of principal on higher-interest rate loans.  This will reduce your debt-to-income ratio more quickly, keep credit cards controlled, potentially lower your mortgage balance while increasing home equity, and simultaneously improve your credit score which makes you more appealing to a lender.

Lastly, for those with credit scores between 620 and 640, consider discussing FHA financing with your lender. These government-insured loans are designed to help borrowers with lower income or credit scores.

While there’s no magic overnight fix to get your credit right, making a few small changes and sticking to a plan, increases the likelihood you’ll get the financing or refinancing you need. Feel free to contact me today for a consultation. I’ll be happy to discuss any questions you may have, and/or help you determine the value of your home.

Allyson Hoffman, ABR, ACRE, CDPE, CRS, e-PRO, GRI, SFR, SRES
RE/MAX Villager
Serving Chicago's North Shore, North and Northwest Suburbs
847-310-5300
[email protected]

Get your latest Home Value
Receive Your Personalized Listing Alerts

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Allyson Hoffman is your ultimate real estate resource for Chicago's North Shore, North and Northwest Suburbs and surrounding areas. Visit my website for detailed information regarding today’s real estate markets.

Photo courtesy of Simon Cunningham/Flickr.com

Down Payment Money Saving Tips

by Allyson Hoffman

Finances can be tight among families today.  Even with increasingly low mortgage rates, the ability to retain enough savings for a down payment on a home can be difficult and frequently requires an earnest dedication to saving before the dream of home ownership is within reach.

Here are some tips to get into a money-saving mindset:

Living Healthy Saves Money

If you are a diehard smoker or caffeine enthusiast, try cutting back on these two vices.  You'll potentially save thousands of dollars per year, feel better and generally remain healthier in the long run.

If fast food often tempts you, try eliminating at least some of those drive-through stops in favor of shopping smarter and making more meals at home -- you'll eat healthier and save a significant amount of money.

Trim the Expenses

Try to generate a list of five to eight things you buy that you really don't need or even use regularly. Could it be an unused gym membership or a video streaming account that makes you pay for streaming and receiving discs at home—that latter of which you never use? Eliminating these are all types of things can save you thousands of dollars each year and bring you get closer to having that needed down payment to buy a home.

Learn to Budget

For most folks, budgeting isn't exactly fun, but if you will routinely write down how much you spend and what you're spending money on, you'll better understand where your money is going and where you can cut corners. And for those who are impulse buyers, this goes double for you.

Choose the Highest First

Since many folks have credit cards, keeping outstanding balances under control is critical.  Pay off accounts with highest interest rates and the highest charges first. This assures that you’ll pay less in the long run, helps to put bills in order of importance and increases the monies you’ll retain for that elusive down payment.  If you have multiple debts, try combining those into one, preferably at a lower carrying cost to increase your ability to pay them off quickly.

Take One for the Team

Most of the time, to achieve a goal requires sacrifice.  So if you have extra personal time, you might even consider taking on a second job to shorten the time it takes to acquire a down payment.  And when you think you are nearly ready, feel free to contact me for a no-obligation consultation. I will be happy to answer any questions you may have and/or help you find your dream home.

Allyson Hoffman, ABR, ACRE, CDPE, CRS, e-PRO, GRI, SFR, SRES
RE/MAX Villager
Serving Chicago's North Shore, North and Northwest Suburbs
847-310-5300
[email protected]

Get your latest Home Value
Receive Your Personalized Listing Alerts

Let’s Connect, Socially!

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Allyson Hoffman is your ultimate real estate resource for Chicago's North Shore, North and Northwest Suburbs and surrounding areas. Visit my website for detailed information regarding today’s real estate markets.

Image courtesy of Pictures of Money/Flickr.com

Knowing When to Refinance

by Allyson Hoffman

Deciding to refinance your home is a big decision because the process accompanying a refinance resembles the same procedures followed when initiating your original purchase mortgage. You'll again need to submit an application, have credit reviewed and obtain a new appraisal for your home.

Refinance costs and the associated potential savings should be evaluated based upon how long you plan to remain in the house to help you determine the financial benefits of this decision.

For example, if refinancing could save you $200 per month and the refinance fees cost $2,500, it would take a year before true savings started.   Generally, the longer you remain in the house, the more money you'll save in the long term.  So, should you plan on selling in the near future or may be eligible soon for a better job in a new area, refinancing might not be as beneficial as the monthly savings indicate.

Here are a few fees that come with refinancing:

  • Application Fee
  • Appraisal Fee
  • Underwriting
  • Recording
  • Credit Report

Some simple guidelines for deciding to refinance include:

  • Consider refinancing to reduce your monthly payments and lower your interest rate.
  • Consider refinancing to reduce the term of your loan.
  • Consider refinancing to consolidate debt.
  • Consider refinancing if the interest rate is more than two percent lower than your current rate.

Keep in mind that these are not hard-and-fast rules since each situation has its own unique elements to consider. Contact me today if you would like assistance and I will be happy to answer any questions you may have, and/or help you determine the value of your home.

Allyson Hoffman, ABR, ACRE, CDPE, CRS, e-PRO, GRI, SFR, SRES
RE/MAX Villager
Serving Chicago's North Shore, North and Northwest Suburbs
847-310-5300

[email protected]

Get your latest Home Value
Receive Your Personalized Listing Alerts

Let’s Connect, Socially!

Facebook
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LinkedIn
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Allyson Hoffman is your ultimate real estate resource for Chicago's North Shore, North and Northwest Suburbs and surrounding areas. Visit my website for detailed information regarding today’s real estate markets.

Image courtesy 24oranges.nl/Flickr.com

Displaying blog entries 1-10 of 39

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Allyson Hoffman & Paul Wells
RE/MAX of Barrington
306 W. Northwest Highway
Barrington IL 60010
Allyson: 847-310-5300
Paul: 847-913-6100

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