Summit County Real Estate: October 2011

Monday, October 24, 2011

Mortgage Terms Simplified

Many first time buyers struggle with the wide array of mortgage jargon and rightfully so. There are points, rates, locks and a variety of fees that all need to be navigated in order to successfully close a loan. The more you know about the loan process and the vocabulary associated with it, the more likely you are to secure the loan that is right for you. Below is a list of some of the most common terms you should be familiar with so you completely understand the conditions of your loan.

Good Faith Estimate (GFE): An itemized list of all the costs and fees associated with closing a loan. A GFE uses a standardized form and is intended to allow customers to compare the costs of one loan with another. The Real Estate Settlement and Procedures act (RESPA) requires that all customers applying for a loan receive a GFE.

Underwriting: The process by which a lender determines a borrower’s eligibility for a loan. Underwriters look at credentials such as income, credit, debt and employment.

Principal: The amount of money owed to the lender.

Amortization: The process by which the principal decreases over the life of a loan.

Down Payment: The amount of money paid upfront for your home. Larger down payments result in lower monthly payments by reducing the amount of principal owed.

Discount Points: Pre paid interest paid by the borrower to reduce the interest rate of the loan. Discount points are tax deductable and typically cost 1% of the total loan amount.

Fixed Rate: A mortgage where the interest rate remains the same for the entire life of the loan.

Adjustable Rate: A mortgage where the interest rate can adjust up or down periodically. With an adjustable rate loan it is imperative that you understand how often and by how much your rate can adjust.

Down Payment: The amount of money paid upfront for your home. Larger down payments result in lower monthly payments by reducing the amount of principal owed.

As always if you have questions about this or anything else relating to Summit County Real Estate, please feel free to contact me at any of the information below.

All the best,

Tyler MacGuire e-PRO®, SFR

Broker Associate

Omni Real Estate Company

Office: 970-468-2740

Mobile: 970-409-7779

Web: www.tylermacguire.com

“Your Guide to Summit County Real Estate”

Wednesday, October 19, 2011

Assessed Value vs Appraised Value

I have often been asked why there can be such a large discrepancy between the assessed value of a property and the appraised value. To clearly understand this question it is first important to understand what exactly the two terms mean. An assessed value is the valuation placed on a property by a public tax assessor, exclusively for tax purposes.

On the other hand, the appraised value is determined by licensed appraiser who uses a number of criteria including recent comparable sales, replacement cost and their professional knowledge of market conditions. Furthermore, the appraised value is what lenders will typically use to determine the value of a home.

All too often home owners and home buyers put too much weight on the assessed value of a home especially when it is favorable to them(high for owners, low for buyers). However, the assessed value will have little if any influence on a lenders willingness to lend on the property. Nevertheless, to get an appraisal done on a home can cost several hundred dollars.

So how can you figure out what your home is worth? Contact your Realtor and have them put together a Comparable Market Analysis (CMA) for you. A CMA will look at similar properties that have sold recently to give an estimate of value. Furthermore, unlike an expensive appraisal that can only be done by a licensed appraiser, many Realtors will put together a CMA for you for free.

If you have any questions about assessed vs appraised values, or would like a free CMA to estimate the actual value of your home, please feel free to contact me anytime at the information below.