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Why An Emergency Fund Is Important

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Why An Emergency Fund Is Important

There’s almost a guarantee that at some point in the future you’re going to face an emergency. Like most things in life, that emergency is going to require money to solve. You can’t assume that you’ll have the funds to face the emergency when it happens. You can’t even assume that you’ll have enough on your credit cards to pay for it. The only safe way to plan is to have an emergency fund.

What Is An Emergency Fund?

An emergency fund is a reserve of cash set aside for emergencies only. It’s not a savings account, because you’re not saving up for anything in particular like a new sofa or a dining set. It’s strictly money on hand to be used in an emergency.

What Constitutes An Emergency

As a homeowner, you could face any number of emergencies regarding your property. An emergency is something unexpected and urgent. In other words, you couldn’t foresee it happening, yet it needs to be taken care of right away. Examples of homeownership emergencies are:

  • Basement floods and needs to be drained and contents cleaned
  • Tree falls on roof, and you can’t wait for insurance check
  • Furnace dies in the middle of winter
  • Central air system dies and there’s a high deductible on your insurance policy
  • Water tank gives out a week before your big family holiday

How To Manage an Emergency Fund

The key thing about an emergency fund is that it needs to be instantly accessible. Instantly accessible means you should only have to use your debit card or write a check to use it. You shouldn’t have to sell stock or transfer money out of your retirement IRA. It should also be kept separate from other funds, so it doesn’t get confused with the Christmas gift fund or the college fund.

Why Have An Emergency Fund?

Emergencies shouldn’t cause catastrophic damage to your finances. With consistent, small saving habits, you can build up an emergency fund so you can easily and readily take care of maintaining and repairing your home. This is part of good homeownership. When you have an emergency fund, you know that you can always keep your home in tip-top shape.

The Pros and Cons of Mortgage Rate Locks

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The Pros and Cons of Mortgage Rate LocksIf you’re just jumping into the game of home purchasing, you are likely considering all of your loan options and may even have heard the term mortgage rate lock. For those who don’t like to gamble, a mortgage rate lock can offer a bit of reassurance, but there are also some downsides to this type of protection. Before signing off on this, here are the details on rate locks so you can make an informed decision.

What Is A Rate Lock?

For many people who are buying a home, the idea of interest rates can make the heart race a little faster, but this is the purpose of rate locks which offer consistency in a market in flux.

Instead of having to deal with day-to-day fluctuations of the rate – which increases or decreases what you owe – a rate lock is a lender promise that you will be held to a specific rate or your rate will not rise above a certain number.

Easy Balancing Of The Budget

The easy thing about utilizing the rate lock, especially for a buyer who is less familiar with the market, is that it will enable you to instantly determine your monthly payments based on that rate. Instead of having to pay more per month, you’ll be able to estimate exactly what your payment will be and it won’t rise above the limit you’ve set for yourself. While daily fluctuations can be a drag, a mortgage lock takes the guesswork out of the day-to-day.

The Added Cost Of Security

It might seem like a rate lock is an option that everyone would utilize, given the stability, but lenders charge for this type of offer because of the risk factor. While lenders can certainly stand to gain if your rate lock is higher than the interest rates, in the event that they rise beyond this point, they will end up losing money. So, while a 30-day rate lock may not end up costing you, this type of lock stretched over a longer period may actually end up costing you more than fluctuating rates.

If you’re not familiar with the world of investing and interest rates, a mortgage rate lock can sound like a great idea; however, there are downsides to this offer and they’re worth considering before getting locked in. If you are currently on the hunt for a home, you may want to contact one of our mortgage professionals for more information.

What’s Ahead For Mortgage Rates This Week – July 19, 2021

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What's Ahead For Mortgage Rates This Week - July 19, 2021Last week’s scheduled economic reports included readings on inflation, Fed Chair Jerome Powell’s testimony before the House Financial Services Committee, and the University of Michigan’s Consumer Sentiment Index. Weekly readings on mortgage rates and jobless claims were also released.

Consumer Price Index: June Inflation Grows at Fastest Pace Since 2008

June’s Consumer Price Index showed the fastest pace of inflationary growth in 13 years; inflation grew by 5.40 percent on a seasonally-adjusted annual basis. Used car sales accounted for one-third of the growth, but prices also rose for clothes, food, energy, and travel/hospitality. The year-over-year inflation rate for May was 5.00 percent.

Inflation grew by 0.90 percent month-to-month, which exceeded analyst’s expectations of 0.50 percent growth and 0.60 percent growth in May. The Core Consumer Price Index, which excludes volatile food and energy sectors also grew by 0.90 percent in June as compared to a month-to-month reading of 0.70 percent in May. Analysts expressed concern that the rapid pace of inflation may not slow as quickly as the Federal Reserve predicted.

Fed Chair Jerome Powell Testifies Before House Financial Services Panel

Fed Chair Jerome Powell maintained the Federal Reserve’s earlier prediction that the pace of inflation would ease, but not immediately: “Inflation has increased notably and will likely remain elevated in coming months before moderating.”Mr.Powell said that inflationary growth has come in at a faster pace than the Fed was hoping to see.

Chair Powell identified three factors contributing to current inflationary growth. Weak inflationary growth during the pandemic will drop out of the year-over-year calculation; Production and supply chain constraints have led to sharp price increases after the pandemic. The third factor is a surge in demand for services as the economy reopens.

The Fed Chair said that “it’s a pretty narrow group of things that are producing these high readings.”

Mortgage Rates, Jobless Claims Fall

Freddie Mac reported mixed mortgage rates last week as the rate for 30-year fixed-rate mortgages averaged 2.88 percent and were two basis points lower. Rates for 15-year fixed-rate mortgages rose by two basis points to an average of 2.22 percent. Rates for 5/1 adjustable rate mortgages fell by five basis points to 2.47 percent on average; Discount points averaged 0.70 percent for 30-year fixed-rate mortgages and 0.60 percent for 15-yar fixed-rate mortgages. Discount points for 5/1 adjustable rate mortgages averaged 0.30 percent.

New jobless claims fell to 360,000 initial claims filed from the previous week’s reading of 386,000 claims filed. Data for continuing jobless claims were not updated last week.

The University of Michigan reported no change in its Consumer Sentiment Index for July with an index reading of 85.5. Analysts expected a reading of 86.3.

What’s Ahead

This week’s scheduled economic reporting includes readings from the National Association of Home Builders Housing Market Index, reports on housing starts and building permits, and data on existing home sales. Weekly readings on mortgage rates and jobless claims will also be released.

Five Required Mortgage Closing Costs – And A Few Tips On How To Minimize Them

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Five Required Mortgage Closing Costs And A Few Tips On How To Minimize ThemMortgages are expensive, and closing costs only add to the financial burden that homebuyers face. But with a little knowledge, you can pinpoint places to save on your mortgage closing costs and keep more money in your pocket. When you’re negotiating your next mortgage, use these tips to reduce required closing costs and keep more of your hard-earned money.

Title Insurance: Request The Simultaneous Issue Rate

Title insurance is an important add-on that no buyer should go without. At the time of closing, there may be a variety of title problems that could arise, such as like encroachments, easements, unpaid liens, and fraud. If a previous property owner wasn’t properly discharged from the title, they may have a claim to the property.

In the event that title ownership challenges arise later on, your title insurance will compensate you for any losses and expenses you incur when trying to prove your ownership. Buying title insurance may help you to avoid the hourly fees you’d pay a lawyer or notary to investigate your title. Typically, when you receive title insurance, you and your lender will each have separate insurance policies on the title.

You can minimize the out-of-pocket expense by asking the insurance provider for their simultaneous issue rate. This is a highly discounted rate that applies when both the borrower and lender title insurance policies are issued at the same time.

Origination Fees: Negotiable If You Have Good Credit

An origination fee is a kind of prepaid interest fee that you surrender to your mortgage broker when you apply for a mortgage. It only applies when you use a mortgage broker.

However, it’s not a mandatory fee for most buyers, even if they go through a broker. The purpose of an origination fee is to compensate the broker for the time and effort they need to invest to get your loan approved. If you have good credit and you can prove your income, then this fee isn’t necessary – and you shouldn’t have any trouble getting your broker to eliminate this fee.

Also note that an origination fee is the same thing as a broker fee. If your agreement includes both, you’re getting charged for the same service twice. Ask for one of them to be removed.

Mortgage Application Fees: Typically A Money Grab

A mortgage application fee is another common fee that you can usually avoid. This fee – which typically runs about $50 or so – is something your lender charges you in order to cover the cost of running your credit report. However, since banks and brokers order hundreds of credit reports every day, they can pull your credit report for next to nothing.

The $50 fee they charge you is, essentially, free money for them – and you can usually get them to drop this fee if you ask.

Underwriting Fees: Your Broker Shouldn’t Charge You For Underwriting

Brokers don’t underwrite loans – lenders do. That means if you’re getting your loan through a broker, you shouldn’t have to pay any kind of underwriting fee – it should already be included in the loan terms the bank set. It’s perfectly valid for a bank to charge you an underwriting fee, but ask your broker to take underwriting fees out of your agreement.

Courier Fees: Handling Documents Should Be A Standard Business Practice

One common closing cost is courier fees. These fees come in different amounts and go by different names. It may be $20 or $50, and it may be called a courier fee or a document handling fee.

Title companies might very well use couriers to send documents, but lenders most likely won’t, and $50 is excessive. Document handling fees are a standard cost of doing business, and that means they should already be included in the lender’s core billed services, not added as an extra fee. Use this argument when you ask your lender to remove the fee; they’ll likely comply.

Boost Your Home’s Curb Appeal and Get a Quick Sale with These 3 Tips

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Summer's Coming! Boost Your Home's Curb Appeal and Get a Quick Sale with These 3 Tips Curb appeal is important in the home sales process, and this is because it will impact the overall first impression that potential home buyers have about the property. Some homeowners can easily spend a small fortune and a considerable amount of time improving curb appeal, but others may be looking for faster and easier results. The good news is that boosting curb appeal is easy and affordable to do when these three tips are followed.

Spruce Up The Front Door

The front door and patio area are focal points for those driving by the home, and this area receives even more scrutiny by those home buyers who walk up to the home to take a tour of the interior. Re-staining or re-painting the front door can be highly beneficial to dressing up the look of this focal area, and this can give the impression that the home is well-maintained and stylish. In addition, consider replacing the front door mat and hardware on the door for improved results and added aesthetic appeal.

Power Wash The Exterior Of The Home

Beautification efforts for the front of the home would not be complete without spending time cleaning up the space, and one of the best ways to clean the exterior of a property thoroughly is by power washing it. Power washing the exterior may include cleaning the exterior siding material of the home, the patio, the driveway, the sidewalk and even the fencing. This can give the entire area a fresher and more appealing look.

Add Color To The Flower Beds

Some homeowners may not have funds or time available to fully revamp the landscaping, but showing the flower beds some attention can pay off. After weeding the flower beds, add some fresh, brightly colored blooms to the area to dress up curb appeal. Homeowners can finish off the look by spreading a new layer of mulch across the flower beds after the flowers have been planted.

Curb appeal is vital to selling a home quickly and for top dollar. Enhancing curb appeal can cost a small fortune and could take weeks to do, but even these small and affordable efforts can give homeowners great results with minimal time and money required. Homeowners who are thinking about selling their property soon can contact a real estate professional for personal assistance with their staging and home improvement efforts.