Home Buying: Refinance or Buy New?

There seems to be a crossroads that many homeowners reach after being in a home a few years: should you refinance your current mortgage or buy a new home?

If you feel your current home will serve your needs for at least 3 more years, stay put.  If your financial situation needs some work, consider a refinance.  It's especially important to refinance before you miss any payments or have a significant change in income or credit.  A cash-out refinance which consolidates all your debt into your mortgage could free up a lot of cash.  Ask a mortgage professional about interest-only loans.  You can weather a financial storm with an interest-only mortgage and pay on the principal when you’ve got the available money.

If you anticipate any significant events in the next 3-5 years, think about the kind of home you’ll need.  Do you need to downsize or upgrade?  Tired of climbing the stairs in your 2-story home?  Consider a ranch-style home.

This common question can be answered by assessing your goals and if your home fits in with them.  After you do that, it will be much easier to determine if you should refinance or buy a new home.

Weak Demand for Home Ownership Feared

The percentage of U.S. homes that are vacant and for sale remained at elevated levels during the third quarter, and the percentage of people who own their homes continued to decline, according to a Census Department report.  These are the starkest signs yet of the severity of the damage in the housing market caused by speculation, overbuilding and rising foreclosures.

The homeowner-vacancy rate, which measures the number of vacant homes for sale, rose to 2.7% — which translates into about 2.1 million houses — in the third quarter from 2.6% in the previous quarter.  Such vacancies hit a high of 2.8% in the first quarter.  Before 2006, the number hadn't risen above 2% since the government began keeping such records in 1965.

Economists say the rising supply of vacant homes means construction activity will likely have to fall further, while buyers slowly absorb these vacant homes, creating an even greater drag on prices and on economic growth.  Housing starts fell 10% in September from August.  In previous housing downturns of the early 1980s and early 1990s, annual starts fell below one million; in September, annual housing starts were at 1.19 million.  But, according to some economists, further declines are likely if the vacant inventory continues to rise.

The latest decline in the homeownership rates indicates that this year, as many as 900,000 households moved from owning homes to renting them, which implies a very low level of housing demand over the next several years.

Mortgage Prepayment Programs: Beware of Fees

We all know the world is full of people trying to convince us to pay for things we shouldn't. For example, programs that promise to help you pay off your mortgage ahead of schedule. Worth the money? Not according to money reporter Stacy Johnson.

If you have more questions about this story, leave us your comment below by using the comment link.  Your email will not be published.

Home Buyer Incentives?  Doesn't Hurt to Ask

In a seller's market, a prospective home buyer needs to be a little more cautious when negotiating a purchase; however, in today's buyer's market, incentives are an accepted part of the deal.  It certainly never hurts to ask for incentives, but be careful not to get carried away to the point of alienating the seller totally to the point they are willing to even negotiate.

It's not uncommon for a seller to wait for three months or longer to sell their home, especially during this time when the market is saturated with homes for sale.  They need to make their home stand out amongst the rest, and often times, offering sales incentives is the easiest way to accomplish this.

When purchasing a new home from a builder, the incentives can be almost endless, and range from new appliances, landscaping, big screen TV's and even swimming pools.

This buyer's market won't be here forever.  Right now, if you're a buyer, you've got an edge; be sure to take advantage of it.

Home Sales Decline in 46 States

Sales of existing homes fell in 46 states during the July-September quarter as the housing market's slump worsened

The new third-quarter figures from the National Association of Realtors underscore the severity of the housing market's slump, which has economists increasingly pessimistic about the economic outlook.

Vermont and North Dakota were the only two states to show sales increases.  No sales figures were available for Idaho and New Hampshire.

The NAR Report did see a silver lining in the data however, noting that home prices rose in 93 of the 150 metropolitan areas surveyed.

Trade group officials emphasize the real estate market is not a national one, and conditions vary — sometimes dramatically — from market to market.