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A Guide to Mortgage Interest Rates

May 16, 2019

Mortgage interest rates are a mystery to many of us—whether you’re a home buyer in need of a home loan for your first house or your fifth.

After all, what does “interest rate” even mean? Why do rates swing up and down? And, most important, how do you nab the best interest rate—the one that’s going to save you the most money over the life of your mortgage?

Here, we outline what you need to know about interest rates before applying for a mortgage.

Why does my interest rate matter?

Mortgage lenders don’t just loan you money because they’re good guys—they’re there to make a profit. “Interest” is the extra fee you pay your lender for loaning you the cash you need to buy a home.

Your interest payment is calculated as a percentage of your total loan amount. For example, let’s say you get a 30-year, $200,000 loan with a 4% interest rate. Over 30 years, you would end up paying back not only that $200,000, but an extra $143,739 in interest. Month to month, your mortgage payments would amount to about $955. However, your mortgage payments will end up higher or lower depending on the interest rate you get.

Why do interest rates fluctuate?

Mortgage rates can change daily depending on how the U.S. economy is performing, says Jack Guttentag, author of “The Mortgage Encyclopedia.”

Consumer confidence, reports on employment, fluctuations in home sales (i.e., the law of supply and demand), and other economic factors all influence interest rates.

“During a period of slack economic activity, [the Federal Reserve] will provide more funding and interest rates will go down,” Guttentag explains. Conversely, “when the economy heats up and there’s a fear of inflation, [the Fed] will restrict funding and interest rates will go up.”

How do I lock in my interest rate?

A “rate lock” is a commitment by a lender to give you a home loan at a specific interest rate, provided you close on your home in a certain period of time—typically 30 days from when you’re pre-approved for your loan.

A rate lock offers protection against fluctuating interest rates—useful considering that even a quarter of a percentage point can take a huge bite out of your housing budget over time. A rate lock offers borrowers peace of mind: No matter how wildly interest rates fluctuate, once you’re “locked in” you know what monthly mortgage payments you’ll need to make on your home, enabling you to plan your long-term finances.

Naturally, many home buyers obsess over the best time to lock in a mortgage rate, worried that they’ll pull the trigger right before rates sink even lower.

Unfortunately, no lender has a crystal ball that shows where mortgage rates are going. It’s impossible to predict exactly where the economy will move in the future. So, don’t get too caught up with minor ups and downs. A bigger question to consider when locking in your interest rate is where you are in the process of finding a home.

Most mortgage experts suggest locking in a rate once you’re “under contract” on a home—meaning you’ve made an offer that’s been accepted. Most lenders will offer a 30-day rate lock at no charge to you—and many will extend rate locks to 45 days as a courtesy to keep your business.

Some lenders offer rate locks with a “float-down option,” which allows you to get a lower interest rate if rates go down. However, the terms, conditions, and costs of this option vary from lender to lender.

How do I get the best interest rate? Mortgage rates vary depending on a borrower’s personal finances. Specifically, these six key factors will affect the rate you qualify for:

  • Credit score: When you apply for a mortgage to buy a home, lenders want some reassurance you’ll repay them later! One way they assess this is by scrutinizing your credit score—the numerical representation of your track record of paying off your debts, from credit cards to college loans. Lenders use your credit score to predict how reliable you’ll be in paying your home loan, says Bill Hardekopf, a credit expert at LowCards.com. A perfect credit score is 850, a good score is from 700 to 759, and a fair score is from 650 to 699. Generally, borrowers with higher credit scores receive lower interest rates than borrowers with lower credit scores.
  • Loan amount and down payment: If you’re willing and able to make a large down payment on a home, lenders assume less risk and will offer you a better rate. If you don’t have enough money to put down 20% on your mortgage, you’ll probably have to pay private mortgage insurance, or PMI, an extra monthly fee meant to mitigate the risk to the lender that you might default on your loan. PMI ranges from about 0.3% to 1.15% of your home loan.
  • Home location: The strength of your local housing market can drive interest rates up, or down.
  • Loan type: Your rate will depend on what type of loan you choose. The most common type is a conventional mortgage, aimed at borrowers who have well-established credit, solid assets, and steady income. If your finances aren’t in great shape, you may be able to qualify for a Federal Housing Administration loan, a government-backed loan that requires a low down payment of 3.5%. There are also U.S. Department of Veterans Affairs loans, available to active or retired military personnel, and U.S. Department of Agriculture Rural Development loans, available to Americans with low to moderate incomes who want to buy a home in a rural area.
  • Loan term: Typically, shorter-term loans have lower interest rates—and lower overall costs—but they also have larger monthly payments.
  • Type of interest rate: Rates depend on whether you get a fixed-rate mortgage or an adjustable-rate mortgage, or ARM. “Fixed-rate” means the interest rate you pay remains fixed at the same level throughout the life of your loan. An ARM is a loan that starts out at a fixed, predetermined interest rate, but the rate adjusts after a specified initial period (usually three, five, seven, or 10 years) based on market indexes.

Tap into the right resources

Whether you’re looking to buy a home or a homeowner looking to refinance, there are many mortgage tools online to help, including the following:

  • A mortgage rate trends tracker lets you follow interest rate changes in your local market.
  • A mortgage payment calculator shows an estimate of your mortgage payment based on current mortgage rates and local real estate taxes.
  • Realtor.com’s mortgage center, which will help you find a lender who can offer competitive interests rates and help you get pre-approved for a mortgage.

Consider me your #1 resource for all things Real Estate! Household changing? Getting married (or divorced)? Time for a change of scenery or job relocation? Want to invest? Just send me an email or call 619-888-2117 – I can help.

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Make Your Move Smarter Not Harder

May 9, 2019

Save Money and Time by Renting Eco-friendly Moving Boxes From a Smart Move

Article By: Ciska Roos for Local Umbrella Media

The process of moving to a new place is like having a second non-paying job. It can be financially, physically, and emotionally demanding; you are responsible for expenses, scheduling, organizing, decluttering—and assembling mountains of cardboard boxes, making sure the bottoms hold when you transport that priceless family heirloom. You can always hire
a moving company to do the packing and unpacking for you, but do you really trust them with your keepsakes and valuables

There is another option: A Smart Move is the new, eco-friendly way to transport your things during a big, or small, move. Based in Carmel Valley, San Diego, this innovative company rents out clean, sani- tized, eco-friendly plastic boxes, which arrive at your doorstep pre-assembled. So, why are these plastic boxes better than the old-fashioned cardboard box?

Moving is not just hard on you, it is also hard on our environment. Those piles and piles of cardboard boxes that you painstakingly assembled and dissembled are labeled as recyclable. You might think that you are doing your part to help the environment when you break down those boxes and put them in the blue bin. But in reality, waste companies don’t want our recycling because it is contaminated with food and nonrecyclable materials. Single- stream recycling, where people throw all of their recycling into one bin, is partly to blame. Additionally, cardboard and paper products take a huge amount of energy to produce.

The best solution is to create less waste in the first place. Buying your own plastic containers is expensive and they take up space. Cardboard boxes are bad for the environment and a pain to put together and take apart. But you’re definitely not going to move small valuables one piece at a time.

If you rent A Smart Move eco-friendly boxes, you don’t have to worry about taking time out of your day to assemble or collapse anything, and you don’t have to worry about the impact your moving will have on our planet. Unlike some card- board boxes, which are just smooth, slip- pery cubes, A Smart Move boxes come with easy carry handles and may reduce injuries. The ergonomic design also allows for easy stacking, so no more awkward pil- ing or playing Tetris in the back of a truck. These boxes save time, and time is money.

If you’re a pros and cons kind of person and lists are your thing, here are just a few reasons why A Smart Move is indeed a smart move: Conveniently delivered to you
Come ready to be packed
Cheaper than cardboard boxes
Twice the storage capacity of cardboard
The bottom won’t fall out Has an easy grip handle
Crushproof and waterproof
Saves time, energy, and money

I came upon this idea several years ago when I had to move into a new home quickly,” said Lindsay Curtis, founder of A Smart Move, renting eco-friendly, reusable moving boxes. “I was upset at the idea of wasting cardboard boxes so I investigated a better solution that could be less hassle and better for the environment. Renting recyclable plastic boxes make good sense and actually cost less!

And there is no shortage of good reviews; the company currently holds an overall rating of 4.8 out of 5 stars on Google Reviews. “They are fantastic! They were super easy to work with and very quick in responding. They were also the best price from my research into similar options inSan Diego. Definitely will be using them again for future moves,” Melanie Thompson, a recent A Smart Move customer said in a review.

Love having a ‘green’ option for moving boxes! We used ASM for a kitchen remodel. The boxes stack really well and were nice not having to build them. Cost is about as much as you’d pay for cardboard. Would highly recommend,” said Rachel van Betten, another satisfied San Diego client.

Boxes are offered in groups of 25–100+and include dollies, easy to peel labels, and zip ties all free of charge. Aside from the eco-friendly boxes, A Smart Move also offers packing supplies; bubble wrap; mattress covers; wardrobe boxes made with corrugated plastic; laundry bags made from a consistent, heavyweight Polyester that is durable, long-lasting, and tear-resistant; packing paper; and chai /sofa covers.

You can now calm the chaos of moving while also helping the environment. It is a win-win situation. For more information about A Smart Move, email info@a-smart-move.com or visit http://a-smart-move.com

Consider me your #1 resource for all things Real Estate! Household changing? Getting married (or divorced)? Time for a change of scenery or job relocation? Want to invest? Just send me an email or call 619-888-2117 – I can help.


Outdated Advice

May 2, 2019

Consider me your #1 resource for all things Real Estate! Household changing? Getting married (or divorced)? Time for a change of scenery or job relocation? Want to invest? Just send me an email or call 619-888-2117 – I can help.

How to Slash Your Home Energy Use Through Strategic Gardening

April 25, 2019

Heating and cooling our homes eats up plenty of energy. Reduce the load with native plants that block summer sun or winter winds.

Editor’s note: Want a climate-friendly home? Your yard is a good place to start. This is the third in a five-part series of guides on how to manage your outdoor turf to reduce your carbon footprint, all while creating bird-friendly habitat. Read part one and two as well. 

A well-designed yard can pack big climate benefits outside of your home—and also inside it, too. 

Acccording to the U.S. Energy Information Administration, residences generate more than 21 percent of the country’s total climate emissions. “Our houses are a major factor in climate change because of the energy used to build and operate them,” says Ellen Larson Vaughan, policy director for high-performance green buildings at the Environmental and Energy Study Institute. A big portion of these emissions are linked to heating, cooling, and ventilation, which account on average for about half of home energy use.

By strategically placing trees, shrubs, and vines to block blustery winter winds or create shade, you can slash the amount of fossil fuels required to heat and cool your house and dramatically reduce your climate footprint. As a bonus, you’ll put a dent in your utility bills.

To maximize your yard or garden’s climate potential, consider the following tips.

What’s Your Climatic Zone?

Which landscaping strategies will make most sense depends on where you live. A U.S. Department of Energy map divides the country into four climatic zones—cool, temperate, hot and arid, and hot and humid—and an accompanying list prioritizes the three most effective actions for each region.

If you live in the cool zone, which includes the Northern Plains and Midwestern states and northern New England, it makes sense to create windbreaks to insulate your house from winter cold and to make sure no evergreen trees block the sun from reaching south-facing windows. If you’re from a hot and arid zone, your best bet is to shade your roof, walls, and windows. Making the most of summer shade as well as directing cooling breezes toward your house are the most important actions to take in the hot and humid region, while residents of the temperate zone should take advantage of the sun’s warming effects in winter and cooling shade in summer.

Made for Shade

As the sun beats down on your house, a huge amount of heat can be absorbed through your roof and windows. However, some smartly located plants can conserve energy and curtail greenhouse gas emissions while reducing your air conditioning costs by 15 to 50 percent.

Where overheating is a year-round problem, use evergreens to provide continuous shade. If you reside in a temperate region, employ deciduous plants, which lose their leaves when cold weather arrives, to block solar heat in summer but let it in during the winter. Wherever you live, be sure to avoid shading any solar panels on your roof.

A few easy ways to shade your house include:

• For quick results, plant shrubs or small trees to shade east- and west-facing windows in the morning and late afternoon when the sun is low in the sky and solar heat can directly penetrate.

• Alternatively, plant vines that will quickly clamber up a trellis or other support. Permanent structures like wooden lattice trellises are most appropriate in hot climates where preventing solar heat gain in winter isn’t a problem. 

• Large trees and shrubs take longer to fill in but ultimately provide the most extensive shade. Trees can reduce summer temperatures significantly, especially when they’re located on the south and west sides of your house. A six- to eight-foot deciduous tree planted near your home will begin shading your windows right away. Depending on the tree species and the height of your house, it will shade the roof in five to ten years.

Warding Off Winter Winds

As anyone who has tuned into a winter weather report knows, wind chill makes cold significantly worse. However, it is possible to keep your house warmer, conserve energy, and reduce your carbon footprint by planting a windbreak—a band of evergreen trees and shrubs located perpendicular to the prevailing winds. In a study done in South Dakota, windbreaks cut home fuel consumption by an average of 40 percent. They also, of course, provide habitat for both breeding and migrating birds.

To create a windbreak with maximum protection, plant at a distance from your house of two to five times the mature height of the trees. Use species that have branches close to the ground, such as native spruces and firs, or plant trees and shrubs together to impede wind gusts from ground level to the treetops. On small city or suburban lots, a dense evergreen hedge planted perpendicular to the prevailing winds several feet away from the house can help keep it warmer in winter.

Capturing Breezes

You can also apply wind-shaping principles to keep your home cool. To direct breezes toward your house, plant a hedge parallel to the prevailing summer winds, in a funnel shape that is wider away from the house and narrower close up. The hedge will not only enhance the breeze but can force cooling air through your windows.

By Janet Marinelli, Audubon

Consider me your #1 resource for all things Real Estate! Are you considering selling or buying a home this spring? Just send me an email or call 619-888-2117. I can help. 

All About Buyers

April 18, 2019

Consider me your #1 resource for all things Real Estate! Household changing? Getting married (or divorced)? Time for a change of scenery or job relocation? Want to invest? Just send me an email or call 619-888-2117 – I can help.

Be Clear on Co-Signing Perils

April 11, 2019

Younger home buyers frequently look to parents or grandparents to help them get into a first home. However, rising home prices and interest rates are presenting challenges for first-time buyers these days, resulting in some turning to co-signed mortgage loans. 

There’s little doubt such joint purchases are on the rise. Of home purchase loans in the U.S. in 2017, the latest year for which data is available, 22.8 percent included a co-signer, up from 21.3 percent in 2016, according to real estate data company ATTOM Data Solutions. 

What should you know about co-signed mortgage loans? 

Start by speaking to a lender or a financial planning professional and take no action until you have that conversation. 

First, as co-signer, you’re 100 percent responsible for the obligation. If the person who’s benefitting from the co-signing loses his or her job and can’t make mortgage payments, you’re now responsible for payments. 

Second, co-signing the mortgage will affect your credit. Any delinquency will appear on your credit report. This could affect your ability to get credit in the future—and the interest rate you’ll qualify for—if you apply for a home, auto, personal, business, or student loan. 

Third, even if the mortgage payments are made on time and in full each month, being a co-signer on the mortgage can count against you when you’re trying to qualify for future loans. That co-signed loan takes up part of your debt-to-income ratio and restricts your ability to borrow additional money for your own purchases. For that reason, if you have plans to purchase a new car or home in the near future, talk to the lender about how this act of generosity will change your borrowing capacity. 

Fourth, your debts will be looked at. As a co-signer, be prepared to provide paperwork to meet the same credit requirements that the borrower is subject to. These include bank statements and income tax returns. Your debt as co-signer will be considered in the loan approval process, with the expected outcome that debt and income from two borrowers will lower the debt-to-income ratio for the loan. For conforming loans, Fannie Mae and Freddie Mac will allow a “blended ratio” DTI that combines the incomes of the occupant and non-occupant co-borrowers. This can help when you aren’t going to live in the house and have most of the income, a common scenario when parents help a child buy a home. 

Fifth, as co-signer, consider whether your help is truly helping the buyers. If they could not afford this home without your contributions, is it appropriate for you to offer help? Do they have the cash flow to make the monthly payments? Do you have the capacity to make the payments if they fall behind? Consider whether they are better off in a smaller, less expensive home that they can qualify for on their own. 

It’s important to note, it remains the responsibility of the home buyer and the co-signer to talk to a lender or professional financial planner to understand the ramifications. However, taking these points into considerations can help set you on the right track.

Consider me your #1 resource for all things Real Estate! Are you considering selling or buying a home this spring? Just send me an email or call 619-888-2117. I can help. 

4 Things to Consider When Choosing Green Flooring

April 4, 2019
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When you’re choosing flooring for your green home, there are a lot of factors to take into account. You want to use eco-friendly materials that are sustainably sourced and will stand up under long-term use. Also, you want them to be installed in a way that minimizes toxic fumes from adhesives and sealants.

Here’s a breakdown of the four major questions you need to answer when considering green flooring:

1. Materials

Every material has pluses and minuses, so consider what matters most to you. Appearance and texture? Durability? Minimal environmental impact in processing the substance and transporting it to your home? A few of the most common options are:

  1. Wood. This flooring has classic visual appeal and is excellent for indoor air quality. Make sure, though, that you buy wood that has been sustainably harvested and is certified by the Forest Stewardship Council (FSC).
  2. Cork. A shock-absorbent material, cork is great for spaces where people will be walking and standing a lot. It’s also good for muting sound. However, it does require more maintenance and more frequent resealing.
  3. Bamboo. Long-lasting and durable, bamboo is harder than many hardwoods and is biodegradable—but it does require more energy for transport from the Asia-Pacific region.
  4. Stone. Flooring made from stone can have a long lifespan, but its durability is also dependent on the softness of the type of stone you select. To minimize air quality issues, ask your contractor to do cutting and grinding off-site as much as possible.
  5. Tile. You have a lot of options with tile, like ceramic, glass and linoleum—each with its own set of characteristics. True linoleum (not vinyl) is manufactured in Europe, adding to transportation energy, but is made from a mixture of natural materials. Ceramic and glass may be locally sourced, though the energy expenditure in initial production is high.

For a more comprehensive review of your options, take a look at our buyer’s guide or our roundup of eight types of eco-friendly flooring materials.

2. Sourcing impact

As you can see from taking a look at the materials above, traveling the distance from a material’s country of origin to your own home has an environmental impact. It’s up to you to take into account the overall life cycle and decide if that impact is mitigated by purchasing a floor that will be long-lasting and made from raw materials that were sustainably grown or harvested.

For a thorough description of the life cycle approach to green building, view the LEED v4 for Building Design and Construction Materials and Resources credit category, which focuses on minimizing the embodied energy and other impacts associated with the extraction, processing, transport, maintenance and disposal of building materials.

3. Installation

There can also be environmental impact from the actual installing of your chosen flooring. Air quality issues can arise from crushing or grinding in the space, as well as from use of adhesives, sealants and varnishes that contain VOCs.

Make sure you take precautions such as minimizing dust and ensuring good ventilation during any type of installation, finishing or refinishing of floors in your home. Choose an adhesive by comparing the VOC information on product packaging or in Material Safety Data Sheets. A good rule of thumb is to use products with VOCs of less than 250 grams per liter.

4. Your space

The specific flooring needs of your space will vary based on size, architectural style, acoustic requirements and even whether you have pets or kids. Using cork or sustainable carpet options will go a long way toward soundproofing your space, for example.

If your spaces need durable floors that won’t scratch easily, you might select certain materials, but you don’t have to use them throughout—if you anticipate a lot of foot traffic in a particular area, you can install flooring in that space that’s more durable than in less-used areas of the home.

Also, think about the conditions in different areas of your home or your geographic location. For areas subject to moisture, for example, avoid using linoleum flooring.

Read about our USGBC art director’s experience with a sustainably sourced, dog-friendly type of engineered wood flooring.

From: GreenHomeGuide – Heather Benjamin 

Consider me your #1 resource for all things Real Estate! Are you considering selling or buying a home this spring? Just send me an email or call 619-888-2117. I can help. 


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