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Factors in Lowering Home Values

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There are many factors that go into a home’s value, and if you’re searching for a new home, particularly as a first-time homebuyer, you need to be aware of these. At Altius Mortgage and our partners at Mortgage Ogden, our mortgage brokers are here for more than just arranging mortgage loan services – we’re here to provide advice on every step of the process.

What are some key factors that might lower home value? These are important to consider as you look for a home – if they’re factors you and your family can put up with, they might help you get a great deal. Here are some factors to be aware of.

Environmental Noise

Even if they’re just the typical sounds of a busy city, environmental noise can have a surprising effect on health – and on home prices. Recent studies show that urban noise could be contributing as much as $3 billion per year in extra health costs in the US.

For this reason, homes in louder areas tend to be assessed at lower values than nearby properties that are in quieter areas. Even features you may not have considered as noise factors might be considered here; think of a 24-hour supermarket, which will reduce nearby home values by 5.1 percent, according to research from realtor.com (only within a 0.1 mile radius).

Emergency Services

Living close to a hospital, emergency room or fire station could lead to a major reduction in cost. A hospital with an ER cut down home prices by an average of 7.6 percent, while fire stations came in at just 1.8 percent reduction. This is due not only to noise, but due to potential transportation concerns.

Places of Worship

Living near a church, synagogue, mosque or other religious building with a weekly attendance of at least 2,000 could reduce surrounding property value by over 5 percent. This is due in part to traffic and parking considerations, and also to general neighborhood crowding.

For more on changing home values, or to find out about any of our other services, speak to the mortgage brokers at Altius Mortgage today.

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What Size of Mortgage Can You Afford?

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We’re here to help with all the technical details of a mortgage situation at Altius Mortgage and our partners at Mortgage Ogden, but that’s not all we do. Our mortgage brokers are also here to offer advice, opinions and expertise throughout the process, including areas you might be confused about.

One of the largest such areas many people need help with? Determining what sort of mortgage they can realistically afford for the future. Here are a few of the most important factors that will play a role in what sort of home loan you can afford.

Income Vs. Expenses

Within your finances, lenders are going to be looking at both your income and regular expenses. Income will be calculated as net, or on a post-tax basis. A vital factor is debt to income ratio – for many of the best mortgage rates and loan terms, lenders will require a ratio here that’s under 40 percent based on growth monthly income before taxes.

There are a few popular rules of thumb that come into play here when you’re searching for a new home. One states that you should never take on a mortgage for more than two and a half times your annual salary, for instance, and this can be a good baseline for many people.

Down Payment

Especially in recent years, down payment amounts have become a huge factor in mortgage situations. Coming up with a 20 percent down payment or more allows you to avoid private mortgage insurance in most cases, which can create a significant savings for you over the life of the mortgage.

Credit History

A credit report with any significant negative marks, such as late payments or defaults, could have a big impact on the loans that are right for you. Bad credit can cause mortgage rates to skyrocket, and will make you ineligible for certain kinds as well.

Want to learn more about the right kinds of loans for your financial situation? Our brokers are here to help. Contact us at Altius Mortgage today.

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Who Should (and Shouldn’t) Refinance Their Mortgage

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Have you heard about the record-low interest rates on home loans these days? Unless you’ve been living under a rock, chances are you have seen the advertisements, received some direct mailers, and had home mortgage companies telling you that you should refinance because rates are so low right now. They are pretty low, and they have been for a while, but interest rates aren’t the only factor you should be taking into account before you decide whether or not to refinance. There are some situations when refinancing is either a bad idea, or it could end up costing you more than you save.

Long-Term Home Ownership

If you’re planning to sell your home in the next few years, chances are the costs and fees associated with refinancing your mortgage will outweigh the savings over time. For most homeowners, the “break-even” point after a refinance is a few years, so even if you save $100 a month on the payment, if you add $5,000 to the total amount you owe, it will take you 50 months (that’s over 4 years) to reach break-even. If you’re planning to stay in the home forever—or at least for several more years—then the cost savings is likely worth it because you’ll get to continue taking advantage of those interest savings for the life of the loan.

Not Enough Savings

The main reason (it could be argued one of the only reasons) to refinance is to save money on interest, but before you go ahead with the process, take a minute to calculate exactly what you will save with the mortgage refinance and decide whether it’s worth the effort and the cost. Most refinance loans include some additional loan processing costs, and you may not be able to qualify for an interest rate much lower. If you’re going to be saving $15 or $20 a month, that’s only a few thousand dollars, and might not even be much more than the fees.

Early Loan Repayment

If it’s financially feasible, it’s a good idea to try and pay off your home mortgage before the 30-year term is up. Some homeowners think that the best way to do so is to refinance into a 15-year loan, and in some situations that is true. However, while that guarantees a shorter term for the loan and may not have a lot of additional monthly cost involved, it might be just as well to take the difference between a 30-year and 15-year payment and pay that toward principal. You’ll still pay off the loan early and achieve those cost savings, plus if something unexpected happens, you won’t be locked into a higher monthly mortgage payment.

Adjustable-Rate Mortgages

One time when it definitely makes sense to refinance is at the end of an adjustable-rate mortgage period. An ARM allows you to have a lower interest rate at the beginning of a home loan, but eventually it goes up according to market rates. If the low-interest part of your ARM is coming to an end, now is the ideal time to refinance.

Cash-Out Options

If you have equity in your home and other debt that you need to pay off, refinancing with a cash-out option will allow you to take the extra money made from the refinance as cash and pay down other debt. In many cases the interest rate you’ll pay on a home loan will be far lower than you would pay on a revolving credit account, so the move will save you money and give you more time to pay down the loan (a 30-year mortgage term). Make sure you’re opting for the cash-out choice because it’s the best choice for your financial situation, though, and not just because you want some extra spending money.

To find out more about refinancing your mortgage and talk to an expert who can help you decide if it’s the right move, call Altius Mortgage today.

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Avoid Going Underwater

If you’re a first-time homebuyer, then your head may be swimming due to the complexities of the mortgage process. While it’s easy to understand your unfamiliarity having never had to go through ay of this before, it is at the same time vital that you educate yourself to the details of buying and owning a home before you make such a huge financial commitment. After all, “swimming” is something that should be avoided when it comes to mortgages, due to the potentially frightening associations that it has to homeownership.

What Does it Mean to Be “Underwater”?

You’ve likely heard of people being “underwater” with their homes, yet may not fully understand what that actually means. If a homeowner is underwater, it means that he or she owes more on the home that what it is actually worth. If you end up in this scenario, you could end up having to deal with a number of problems. For example, if you’d like to refinance, your options could be extremely limited. That’s because few lenders may be willing to offer you great rates given the current market value of your home.  Plus, if you need to move due to a work relocation or a loss of income, you could end up still owing money on your home even after its sale.

How You Can Avoid It

Yet going underwater with your mortgage isn’t unavoidable. Listed below are  few things you can do to ensure this doesn’t happen to you:

  • Save up for a large down payment: The less you owe on your home the better. Even if it means renting for longer than you’d like, the added equity will be worth it.
  • Don’t overpay for your home: Don’t get caught in a bidding war that forces you to pay more, no matter how much you may love the property.
  • Make extra payments when possible: By paying even as little as one extra mortgage payment per year, you build up more equity while also saving on interest.

While learning as much as you can about homeownership is important, no one expects you to become a mortgage expert overnight. Fortunately, you don’t have to be. With the assistance of a well-qualified mortgage broker like the Altius Mortgage Group that offers easy access to both services and advice, you’ll have the resources needed to ensure that you’re well-informed before making any major decisions.