Fixed vs. ARM? Which one is right for your client?
When the housing boom hit in the 2000s, many borrowers would often choose the ARM to qualify for a home that they may not have been able to purchase with a fixed-rate mortgage. This would allow them to have a lower interest rate initially and have the ability to pay down more principal before the loan is adjusted. Today, fixed-rate mortgages (FRM) are at record lows and with the fluctuations in the housing market, the ARM has decreased in popularity. FRMs now account for 90% of purchase and refinance loans. But just because something is more popular doesn’t necessarily make it better. For some, it’s a matter of preference based on their financial plans and goals. Others prefer the security of FRMs and knowing that no matter what, their rate will stay the same. But as property prices rise and getting qualified becomes more difficult, the ARM is steadily becoming more favorable. Fixed-Rate Mortgages Pros: Stability: No need to worry about interest rates changing and your payments increasing. Tax benefits: In the early years of FRMs, the payments are heavily weighted with interest and not principal which results in a higher interest tax deduction. Low rates: Currently, rates are near all-time lows. Cons: More expensive: Monthly payments are typically higher…
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Everything You Need to Know About Homeowners Associations
There’s a lot to consider when deciding to purchase a home. Some issues will be front and center, like the location and condition of the property, but others will be less visible and require due diligence on the part of buyers to get the full picture. One major example of a sometimes underappreciated factor in the home buying experience is the impact that a Homeowners Association (HOA) will have. What Is an HOA? HOAs are private organizations that manage residential communities. Their leadership, often called the HOA Board, is composed of unpaid volunteers from the community that are elected by their neighbors and tasked with establishing and enforcing rules and regulations that dictate how the community will operate. What Rules and Restrictions Do HOAs Set? Not every HOA operates the same way, but generally their rules and regulations are codified in a document called a Declaration of Covenants, Conditions, and Restrictions (CC&Rs). CC&Rs will explicitly address how homeowners can use and alter their home: Paint Color: Some HOAs limit the colors that the properties in their community can be painted. Some require homeowners to submit new color choices for board approval before painting can commence. These and other exterior design choices may be strictly limited to ensure that the whole…
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