NEWSLETTER - OCTOBER 6, 2006
CREIG SAYS...
Dear Friend:
If you are looking for house, it is still a great time to buy a home. According to the National Association of Realtors, pending home sales have increased, showing that the housing market continues to stabilize.
In addition to real estate market stabilization, interest rates have remained low. There are also have a variety of traditional and non-traditional mortgages available to suit the unique needs of today's buyers. To learn about the various loans available, read "Insider Tips" below.
As always, whether you are planning on buying, selling, or relocating, our team of real estate professionals is ready, willing, and able to provide you with extraordinary service at no extra cost. Call 800.831.SOLD or click here to contact us today. It would be our pleasure to assist you!
Best regards,
Creig Northrop
Click here to view real estate trends
THE NORTHROP TEAM IN THE COMMUNITY
We realize how important it is to give back to the communities in which we work and live. Each year, The Northrop Team supports a variety of local organizations and non-profits, in addition to hosting our own Team events.
Check out Northrop Team Community Events
INSIDER TIPS
FINANCING OPTIONS FOR TODAY'S BUYER
If you are considering buying a home, there is no time like the present. There is a great selection of homes from which to choose and interest rates are low. In fact, historically, we have not experienced interest rates this low since the late 1960s.
A variety of financing options area available to enable today's buyers to purchase a home. Which loan is for right for you? It depends on a variety of factors, including your comfort level. Below is a brief description of some of the financing options from which to choose, as well as which type of buyer each loan is best suited.
If you want PREDICTABLE MONTHLY PAYMENTS, consider one of these loans:
Fixed-Rate Mortgages: Loans where the monthly principal and interest (P&I) remain the same for the life of the loan. This type of loan protects the borrower from rising interest rates.
Fixed-rate loans are best for:
- Buyers who prefer regular payments with no surprises;
- Buyers with limited or fixed incomes;
- Buyers who plan to stay in their homes for a long time; and
- Buyers who are buying a home at a time when interest rates are comparatively low.
40/30 Fixed-Rate Balloon Mortgages: A hybrid of the fixed-rate loan, the 40/30 loan has a fixed rate for 30 years, following by a single "balloon" payment of the entire remaining balance.1 These loans offer lower monthly payments than a standard 30-year fixed rate mortgage.2 They also offer the buyer more borrowing power since the monthly payments are lower and the loan term is longer.
40/30 fixed-rate loans are best for:
- Buyers who want regular payments with no surprises;
- Buyers who plan to stay in their home for a long time;
- First-time buyers and real estate investor;
- Buyers who want to purchase a home in a relatively high-priced market; and
- Buyers who are concerned that their debt could keep them from qualifying.
If you want LOWER MONTHLY PAYMENTS AT THE BEGINNING OF THE LOAN, consider:
Adjustable-Rate Mortgages (commonly referred to as ARMs): These loans feature a fixed interest rate for a portion of the loan, after which the interest rate adjusts periodically based on the market conditions. The initial interest rate is often lower than that of a fixed-rate mortage. There are also a variety of fixed-period options ranging from 1 to 10 years.
ARM loans are best for:
- Buyers who need a larger loan amount than they can qualify for with a fixed-rate loan;
- Buyers looking to save money in the short term; and
- Homebuyers who plan to move or refinance their mortgage within a few years.
If you need a SPECIALIZED LOAN PROGRAM for your unique needs, consider one of these loans:
Interest-Only Mortgages: These loans feature low monthly payments consisting of interest only for the first five or seven years of the loan term. They are available with 5/1 and 7/1 adjustable-rate loans (see description of ARM loans above).
Interest-Only, 30 Year Fixed Mortgages: This loan offers features of both interest-only and fixed-rate mortgages. The interest rate remains the same throughout the 30 year loan period. During the interest-only protion of the loan (either 10 or 15 years), each time a principal payment is made, the payment amount and balance are reduced the following month. In month 121 (for a 10 year option) or month 181 (for a 15 year option), the loan then converts to a 15 or 20 year principal and interest payment at the initial interest rate, but the payment amount is based on the loan balance at the time of conversion.
Benefits of the Interest-Only Feature: Because borrowers qualify based on the interest that must be paid each month, they may qualify for larger amounts. Principal payments are not required during the interest-only period; however, borrowers may make principal payments without a penalty.
Interest-only loans are best for:
- Savvy consumers who are looking for lower monthly payments and a chance to redirect their cash flow toward potentially higher return investments;
- Relocation customers who do not intend to live in the house for more than a few years;
- Bonus- or commission-based customers who want to make non-scheduled and optional principal payments during the interest-only period of the loan; and
- Individuals who expect their earnings to significantly increase in future years.
Alternative Documentation Loans: These loans offer alternative documentation options for income, debt, and credit than a traditional loan. They also offer less hassle for self-employed borrowers (or foreign nationals) and financing options for unusual property types such as condotels and log/earth homes.
Alternative documentation loans are best for:
- Self-employed buyers who may have trouble with typical mortgage documentation requirements; and
- People interested in financing for unusual property types.
Now that you have an idea of the loan options available to you, the next steps are to:
OUR CUSTOMERS ARE SAYING...
"All was great! Really good job!!
Will never buy or sell with anyone else."
~ The Auvani Family
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