Michael Creed's Blog

Filling the Kitchen with a Nice

Scent Will Make It Seem More Inviting

A pleasant, working kitchen is near the top of most buyers’ list of priorities when buying a home.  A terrific kitchen can easily sell a house, so any time you spend improving yours is time well-spent.

Even the most modern kitchen should have some homey touches that make the room inviting, so set the scene with a few carefully selected props:

• An open cookbook
• A copper colander filled with fresh fruit or berries
• A bunch of carrots on a wooden cutting board
• A ceramic mixing bowl and wire whisk

You should also fill your kitchen with a rich scent that will appeal to the buyers.  Here’s a stove-top mix that is guaranteed to have buyers longing to whip up a batch of cookies in your oven:

Granny’s Aromatic Scent

1 whole nutmeg

5 cinnamon sticks

1 tablespoon whole allspice

1 tablespoon whole cloves

Halve the nutmeg and add all ingredients to 3 cups of water in a saucepan. Bring to a boil and then lower to a simmer.

Being that the holidays are on us, maybe you want to try one of these five Christmas scents instead.

In the heat of summer, when the scents of baking bread and simmering cinnamon may seem a bit too heavy, a bowl of lemons on the counter will provide a fresh and pleasant aroma.  Or, the simplest of all, just brew a pot of coffee just before your buyers arrive.  Its hearty scent appeals to almost everyone, even non-coffee drinkers.

Why would I write about a topic like this? Well, because a watchful eye can save you a lot of money now and in the future. Beyond that, I don't play these games and I want you to be aware of those that do!

A central problem in shopping for a mortgage is that the loan officer knows far more than the borrower regarding mortgages and the corresponding processes involved with closing them. Because of this, you need to know the tricks used and how to protect yourself against them.

Low-ball Offers: To draw customers, some brokers and lenders will advertise low-ball prices that they have no intention of honoring. Once they get you in the door, they will play bait and switch, which is a game commonly known to be played by some appliance merchants and others who advertise a low-ball price but when you arrive at their store they happen to be out of the advertised special and try to interest you in something else. A similar version of this game involves keeping you on the hook in the hope that market rates might drop enough to make the advertised special profitable.

Protection: Don't respond to any ad that quotes a price 1/2 point or more below the lowest price offered by anyone else.

Bait and Remember: Some mortgage brokers and lenders will fail to mention certain fees until the borrower is in too deep to bail out, then WHAM! they remember them.

Protection: Require the broker or lender to provide a written list of all fees to be paid by you, including known payments to third parties such as credit reports and appraisal fees. It should also include an estimate of all prepaid items, estimated escrow deposits (if any) and charges by third parties unconnected to the lender which may not be 100% accurately known until later; an estimated cost is better than simply leaving it blank until it is known at a later date. Further, you are never really in too deep to bail out; call me and I can help you find a way out!

Charge a Rate Lock Fee But Don't Lock: Some mortgage brokers will charge borrowers to lock the rate and points that you have agreed upon, but not inform the lender. If interest rates don't rise, the broker pockets the lock premium, and if they do rise the broker falls off the face of the earth. This is much less of a hazard when dealing with a direct lender - First Omni is a direct lender that doesn't charge anything to lock a rate for 60 days or less! All we need is a property address and we can lock it on the spot!

Protection: Insist on seeing the loan commitment letter or other written documentation from the lender who has allegedly locked your loan. You should not deal with a mortgage broker or lender who won't agree to show you this in writing.

No-cost Loans That Aren't: Loans with high rates for which lenders will pay points are sometimes advertised as "no-cost" loans, which they are not. They are zero point loans, but there may be substantial fees of other types. False advertising is not limited to brokers.

Protection: Check the APR on the Truth-in-Lending Disclosure Statement. On a true no-cost loan, the APR should be the same as the interest rate. If the APR is significantly higher, it is because there are substantial fees involved.

Interim Refinance: Borrowers who want to refinance a mortgage that has a sizeable prepayment penalty may fall prey to the interim refinance tactic. The first refinance is for an increased loan amount that includes the penalty but carries a high rate, while the second, occurring several months later, lowers the rate. The borrower does avoid having to pay the penalty in cash, but the cost of the penalty that was rolled into the first new loan, combined with the costs of closing second new loan, wipes out most or all of the gains from refinancing in the first place.

Protection: Just don't do it; wait until the pre-payment penalty expires to close the new loan with the low rate or refinance to the lower rate the first time. Any interim loan is a scam.

Contract Trickery: Borrowers who accept whatever they are told may fall prey to contract trickery - the incorporation of a provision in the loan note that is favorable to the lender...without mentioning it to you, the borrower. Lenders will usually pay an extra 1-2 points to the broker for a prepayment penalty clause to be added to the note, so the broker who includes it in the contract without your knowledge can put the point in his pocket -- rather than in yours, where it belongs. Loan officers working for lenders might do this as well.

Protection: Read all documents carefully at every stage of the process; if there is not a prepayment penalty, it will be shown on the Truth in Lending Disclosure Statement; if there is a pre-payment penalty, it may be shown on the same disclosure. If you see something that looks like there may be a pre-payment penalty, you should ask for written proof that one does not exist.

Note: This article has been “chewed up and spit out” so many times that I cannot rightfully tell you who the original author is. I have added a lot of information to it and paraphrased several articles over time, but parts of it are still available on the internet through many different sources; if you know who the original author is, please contact me so that I can get them the credit they deserve! In the interim, Thanks to the Unknown Author!

Factors other than your monthly payment should be considered when choosing your home loan.

Nobody wants to make a high monthly mortgage payment; why would they? However, becoming so focused on a low payment that you ignore the other aspects of a new home loan can be a expensive mistake. That's because a home loan isn't just a payment; rather, it's a package of benefits and obligations that could be yours for a very long time.

Monthly payments that seem too attractive to be true - which they usually are - can result from a number of situations. Here are some of the possibilities:

No rate lock. The payment could be based on an interest rate that isn't guaranteed and then becomes unavailable either because market rates have changed or only the crème de la crème of borrowers can meet the requirements for that rate.

Short adjustment period. The payment could be very short-lived. Adjustable-rate mortgages typically are fixed for three, five or seven years, but some loan products have rates that adjust after one year or, in the most extreme cases, one month.

Negative amortization. Your monthly payment might not cover all the interest that's owed each month, which means the amount you owe could increase over time though negative amortization.

Buy down or points. The payment could be based on a buy-down or points, both of which involve sums of money paid upfront to reduce the interest rate. A buy-down usually applies only to the first few years of the loan.

High fees. The payment could be offered on a loan product that has other unattractive upfront fees or costs.

All of these situations could be advantageous for certain borrowers. For example, an adjustable-rate mortgage might be attractive for a person who plans to move in the short term while points may make sense for borrowers who plan to stay-put in the same home (and the same loan) for many years. Either way, you should carefully consider all of the terms of the loan and not just focus on which option offers the lowest monthly payment.

One way to assess the cost of a loan is to compare the annual percentage rates (APR) of comparable loans. The APR reflects the cost of the loan over the term; including all up-front costs. Consider, also whether the rate is locked, how rate adjustments are structured and whether mortgage insurance is required.

A very low payment might enable you to buy the home of your dreams today, but if the terms of the loan could be detrimental to your long-term financial wellbeing, you might want to reconsider. Buying a less costly home, borrowing a smaller sum or making higher payments in exchange for less risk, or more appropriate loan terms, might be smart decision.

If, after reading all of this, you still feel that payment is the most important factor in your mortgage choice, consider the following. Depending on your long term financial goals, extending the term of your loan may be the way to go. When you make this choice, however, consider the data in the graph below; it shows the relationship between the payment and term at any give rate and loan amount as well as the relationship between amount of principle paid on the 12^th scheduled payment and the amount of principle paid on the 72^nd scheduled payment .  As you can see, a shorter term will have a higher payment, but will have a lot more of the money going toward principle.  A 50 year term, which does exist today, is essentially an interest only loan for the first twenty years because you make very little headway on your original principle balance.  If the 50 year is the option you like the most, you may want to consider simply getting into an interest-only loan because the interest rate will undoubtedly be less than it would be for a 50 year fixed causing your payment to be even less.

Parts of this entry are paraphrased from an article published by one of my company's (First Omni Mortgage Lending) business partners by the name of LendingTree.com; to read the original article, please click here.

A Realtor can save you time and assist you in house hunting by:

• Pre-selecting homes that are within your price range and meet your requirements for size, location, etc.

• Scheduling appointments for you to see homes, even when the owners are not there.

• Giving you current selling prices for houses similar to the ones you are considering.

• Getting up-to-date information about taxes, school districts, and conditions in the areas that interest you.

• Arranging for a home inspection; a necessary step in buying a home.

What to look for in a Realtor:

• Knowledge about the community you want to live in.

• Experience and patience.

• Full access to the area’s Multiple Listing Service (MLS).  The MLS gives you the listings of all sellers, not just those represented by your Realtor’s company.

• Ability to understand your wants, needs, and personal tastes.

• Honesty and trustworthiness.

• Willingness to keep you informed of changes in the market , without trying to push you into buying before you are ready.

Best of all, a Realtor is almost always paid by the seller of the home you choose; even if your agent didn't actually list the house for sale!!! You have nothing to lose by working with a Realtor in 99.9% of the transactions!

If you do not yet have a Realtor, please let me know as I have many contacts nationwide that I can refer you too; I only keep the best of the best on my list for referrals! Some of them are listed here on my website and the rest have yet to be added (I do all my own designing on this site so it's taking some time.) Thanks for reading and feel free to contact me at any time with questions.