HOW TO SHOP FOR THE BEST MORTGAGE RATES

Mortgage rates are still at historically low levels, they haven't changed much this year.  But this may change anytime soon. 

Both home prices and mortgage rates are expected to rise as season changes.  Mortgage rates vary depending on what product you choose and how you shop.  So how do you get the best rate? Here are some tips on how to shop for the best rates. 

Choose a term on your mortgage based on how long you expect to be in your home.  

30-year fixed rate is the most expensive among all mortgage products because the rate is the highest and you are paying for the longest term.  If you are planning to stay in your home for five years or less, then it is advisable to take a 5/1 adjustable rate mortgage (ARM) which is fixed for 5 years - it is a much cheaper option.  If you're conservative, try a 7/1 or 10/1 ARM - both rates are lower than the 30-year fixed rate and you can save thousands of dollars over the life of the loan. 

Complete the Required Documents

Make sure that you have the complete documents before even applying for a loan.  A great mortgage rate can turn into a bad rate if you have to extend it because you still need to complete your documents.  Remember, ALL lenders will not waive any of the required documents.

Beware of Hidden Fees 

Make sure that you review the full breakdown of closing costs before even committing to a lender so there will be no surprises come payment time. Also read all the fine prints to understand your contract. 

Compare Zero-closing Cost Mortgage 

At 12.5 basis points (.125 percent) added to your mortgage rate or equivalent of monthly payment increase of $30 to $50 may save you $4000 in closing cost or more. This of course, depends on how long is the term of your loan. 

Get One Credit Report Done

Asking multiple lenders to run your credit score can actually damage your score. Choose one lender to run your credit report,ask them to do a three merge score from Experian, Transunion and Equifax all together.

For a list of lenders, please do not hesitate to contact me.

Common Mistakes To Avoid When Renting Out Your Property

Mortgage rates are at its historically low these days. Some home owners take advantage of the low mortgage rates to invest in real estate and use it as a rental property to generate additional income.  When they rent out their property, someone else is paying for their mortgage while they earn extra money from the difference in mortgage and rent.  Renting out properties is a great way to earn additional income but it can also be a nightmare if you don't know how to manage it. If you want to have a smooth rental business, make sure to avoid these common landlord mistakes when you rent out your home:

1. Being Lax About Screening
Finding the right tenant is always the key to having a successful landlord tenant relationship.  Always set your guidelines of who you do and don't want to rent to. Make sure they fill out the application form with the correct information. This way you'll get an idea of what type of person your prospective tenant is.  Use a national credit check company to run their application. You must check for credit, employment and rental history. Ideally, they must pass all 3, but 2 out of 3 will suffice. It is an automatic denial if they have any criminal or eviction record.

2. Not Having Correct Documentation
Having a signed lease agreement is always a smart thing to do. The agreement will serve as a guideline for the tenants to follow in renting the property. The document will cover topics such as late payments, pet policies, vandalism and so on...

Realtors or an attorney can help you create a rental agreement in accordance to the state rules and your preferences.

3. Discriminating Against Prospective Tenants
Familiarize yourself with fair housing rules. The Human Rights Commission is very strict on discrimination when it comes to housing.  The Fair Housing Act prohibits the discrimination in the sale, rental and financing of dwellings and in other housing-related transactions, based on race, color, national origin, religion, sex, familial status (including children under the age of 18 living with parents or legal custodians, pregnant women, and people securing custody of children under the age of 18), and handicap (disability). (Source: www.hud.gov)

If you want to turn down a renter's application, use a credit or background check to support your decision.

4. Forgetting to Prepare Your Home
Home staging is always important, whether you want to sell your home or have it rented out.  If you want to get top dollar on your investment, then better make sure that your property is move-in ready and in tip top shape.  Fix everything that needs to be fixed.  Paint the walls and ceilings. Also make sure that your flooring
is nice and clean. Preparing your home makes the home more marketable to prospective tenants and easier to rent out.  The state of the home will always say something about the personality of the owner. If the house looks shabby, then it will reflect on the landlord.  The house that's going to be rented out must always be move-in ready.  Renters will NOT make any improvements on the property that they are going to rent.

5. Forgetting To Buy Correct Insurance
Even if you have homeowners insurance, it will not offer full coverage if your home is being rented out full time.  By getting a landlord insurance, you can protect yourself from damages, accidents and financial losses on your rental property.  The landlord insurance will not cover the loss in renter's possession in case of damages, so it is better to require your renters to purchase a renters insurance.

NOW is the best time to invest in Real Estate! Rental demand has increased in the past few years. Rent is one of the best way to build your wealth. While someone is paying off your mortgage, your property is appreciating. It may not be evident now, but wait for a few more years while the market stabilizes then you'll see the increase in value of your property.  Properties have always gone up over the long term. 

According to NAR (National Association of Realtors), Investors have reported in many cases a positive cash flow converting properties to rental units.  The continued trend of rising rents increases the value of home ownership.

If you are on the look out for properties that you would like to rent out, always consider the location and the state of the property.  For a list of properties, visit www.anchoragehomedeals.com.  If you have a question, please don't hesitate to contact me.