Using Houzz and Pinterest to For Your Next Home Improvement Project

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Everyone’s heard of Houzz and Pinterest, but these sites are a lot more than just a vast collection of online images. They also serve as fabulous resources for homeowners who need a little inspiration and help coming up with a solid plan for their next home improvement project.

The tools available on these sites allow homeowners to not only gain some much-need inspiration, but also to organize their projects, collaborate with professionals, and even do a little shopping.

Houzz

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On Houzz, you’ll find an immense array of images and info needed for you to gain some inspiration and ideas for your next home improvement project. Not only that, just about every well-known professional in the world of home improvement and design has some presence on Houzz.

Ideabooks – A great way to start using Houzz is to use an ‘ideabook’, a place where you can save all of your favorite images, notes, products, and other details related to your next project. Ideabooks can also be used to communicate and collaborate with any professionals that will be helping you bring your vision into reality. 

For instance, if you’re currently planning a bathroom overhaul, you can use ideabooks to collect images of bathrooms that have caught your attention and narrow down the specific style, color palette, and finishes that you like. You can then send this collection to the people you’ve hired to help you and show them what you want to have incorporated into your project. Essentially, your ideabook can serve as a workbook that you can use to work together with the experts you’ve brought on board to help.

When using ideabooks, you might want to organize them according to different design elements. These image collections can be a great resource to use if you’re ever feeling overwhelmed with all the choices and decisions that need to be made.

Sketch – The ‘sketch’ feature is another handy tool and makes it easy to communicate with your designer or others using images. It even allows you to add any products you may have found from the Houzz Shop to these photos. You can even write or draw on the images and add some stickers to make communication even easier and faster.

Whether you want to circle a certain feature that gives you some inspiration, jot down room dimensions, or sketch out the location of where you want certain pieces to go, sketch can make this easy.

Pinterest

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While Houzz is geared specifically towards homeowners and professionals in the home improvement and design industry, Pinterest is for anyone and anything, including elements of the home.

Pinterest is a website that lets you post and categorize photos on the web. It’s an awesome visual tool that essentially allows you to collect ideas for home design and remodeling by categorizing your images into ‘pinboards’, which are essentially the equivalent of Houzz’s ‘ideabook’. These boards can be used for any room in your home, as well as for exterior components, such as your landscaping and other type of exterior design.

There’s really no limit to what you can use pinboards for. For instance, many users on Pinterest use boards to gather ideas and inspiration for their favorite pieces of art or even their appliances. 

Why is this useful? Creating these boards can help you hone in on exactly what you strive to achieve in your home. And if you’re using a designer or contractor of some sort, your Pinterest boards will give them a clearer idea of what your personal style is, which can help save a lot of time, frustration, and even money. In fact, more and more homeowners and their designers are using Pinterest to collaborate and share ideas to communicate them more effectively and make the job much easier.

Pinterest is also great for finding pieces for your home that you might not necessarily find at a retail store or by doing a Google search on the net. You’d be amazed at all the unique finds that you will discover by perusing this handy site, including furniture, accessories, and fixtures.

If you want to keep your boards private from the 50 million Pinterest users and post them only for your eyes to see, you can do so, but you’re only allowed a maximum of three private pinboards on this site.

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Homeowners can use Pinterest in a number of ways to achieve their goals:

Creating a clear vision – It can be challenging for the average homeowner to clearly visualize the precise look that they’re going for. Luckily, Pinterest can help with that. You can have different boards dedicated to various components of your project. Simply think about all the items that will go into creating the final look you’re going for, then include them on your board. This can include things such as color schemes, textiles, lighting, flooring, building materials, furnishings and so forth.

Organizing your items – Once you’ve added all the items as mentioned above, you can then systematize your boards into themes according to the items you’ve added. This is helpful not just for you, but for any designer that you may be collaborating or working with. By creating boards to hold certain items or ideas, you’ll have an easier time honing in on each board one at a time as each phase of your project is completed.

Buying items – Not only is Pinterest a great place to gain inspiration for home remodeling or decorating ideas, it’s also an awesome resource to purchase pieces that you simply won’t find anywhere else. After you’ve managed to narrow down your choices in the above steps, you can begin shopping for them. A lot of the pins for products have links that connect users directly to online stores that sell them, making outfitting your home according to your project specs a cinch.

The Bottom Line

Both Houzz and Pinterest certainly offer a plethora of ideas and sources of inspiration, probably more than you will find anywhere else. But in addition to all the images that homeowners can draw ideas from, these sites are also great resources to help organize projects, choose a design, pick materials and finishes, and communicate with designers and other professionals. With tools like these at your fingertips, planning and designing your next home improvement project has never been easier.

The Lowdown on FHA Condo Approval Requirements

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Whether you’re selling a condo or are considering buying one, it’s important to know if a certain complex is FHA-approved.

Condos that are approved by the Federal Housing Administration are those that meet U.S Department of Housing and Urban Development (HUD) property eligibility requirements. In order to get approved, condominium associations have to go through a specific application process. If approved, the condo complex will be included on a master list that’s managed by the FHA.

So, why is this all important? Both buyers and sellers would greatly benefit from condos that are FHA-approved, and here’s why.

Benefits For Buyers

If you plan to take out an FHA home loan, you’ll need to make sure the condo you plan to buy is FHA-approved. FHA mortgages are very attractive for buyers because they are among the easiest types of home loans to qualify for. These types of government-backed mortgages require a smaller down payment compared to a conventional mortgage, requiring as little as 3.5%. In addition, buyers can get approved even if they have less-than-stellar credit.

Condos that are FHA-approved also adhere to certain quality control requirements that not all HOA associations are able to meet. In fact, it’s tough for condos to get approved by the FHA because of the strict requirements. As many as 60% of associations are denied FHA approval, which means those that do are very stringent in how they manage their condos. The FHA only loans money to buyers for condos that are considered to be a safe investment.

Buying real estate always comes with some inherent risk, and ensuring that you’re buying a sound property is extremely important. Purchasing a condo that the government deems to be a good buy can offer you some peace of mind knowing that you’re investing your money wisely. You’ll also have the guarantee that your condo HOA is financially fit and therefore has enough reserves to cover any potential issues in the future.

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Benefits For Sellers

If you’re a seller of a condo, you also have certain advantages if your complex is FHA-approved; namely, a much wider pool of buyers. If buyers are planning to take out an FHA home loan, they won’t even look at your unit because the only condos they’ll be eligible to purchase are those that are approved by the FHA.

Without FHA approval, your condo will be unattainable to many buyers who may otherwise be ready and willing to offer you the price you want and deserve for your property. Obviously, the more buyers your listing can attract, the better the odds of selling more quickly, and potentially for more money.

Even if a buyer has a handsome income to be able to comfortably afford your condo with a conventional mortgage, your condo may not sell for as much as it could if it does not meet FHA requirements.

What Are the Requirements For Condos to Be FHA-Approved?

In order for a condo to achieve FHA approval, it needs to meet certain requirements, including the following:

  • A maximum of 50% of the property can be used as commercial space;
  • A maximum of 15% of the units can be more than 60 days in arrears;
  • At least 50% of all the units must be owner-occupied (the exception to this rule applies to condos with at least 3 years of stable finances and low delinquency rates, which can have as little as 35% rental units);
  • A minimum of 10% of all budgeted income must be dedicated to a reserve account;
  • Reserve funds must be enough to cover all insurance deductibles and capital repairs and replacements for the next 2 years;
  • General liability insurance must cover all common elements and public ways;
  • Complexes with 20 or more units must have a fidelity bond to cover the Board of Directors and staff that handles association funds.

This list is by no means exhaustive. There are plenty of requirements that condos need to meet in order to be approved by the FHA, which is why so many complexes have not been able to achieve such status. That’s why FHA-approved condos are often seen as more valuable than those that don’t come with such backing.

The Bottom Line

Condo complexes that are approved by the FHA offer advantages to both buyers and sellers. Buyers who are looking to make a purchase using an FHA home loan need to ensure the place they’re looking at is FHA-approved, while sellers can expand their pool of prospective buyers. These types of dwellings are typically the most cost-effective option for buyers, and available FHA financing helps to advocate affordable homeownership.

When is it a Good Time For a Cash-Out Refinance?

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Many homeowners throughout the country have built up enough equity in their homes that can be pulled out and used for many of life’s major expenses. Yet while there are various ways to get that money out, one popular way is through a cash-out refinance.

This type of program involves refinancing your mortgage for more than what you presently owe, and the difference is taken out in liquid cash. You essentially secure a new loan that replaces your existing mortgage in order to get your hands on those funds. Once you have that money, you can put it towards large purchases or expenses, or to pay off high-interest debt.

How Does a Cash-Out Refinance Differ From a Home Equity Loan?

Even though a cash-out refinance and home equity loan will allow you to use the equity that’s built up in your home for various expenses, these two programs are slightly different from one another.

A cash-out refinance means that your existing mortgage loan is being replaced with another single loan that’s bigger than the original. You still have only one monthly mortgage payment to worry about over the life of your home loan. And if the replacement mortgage comes with a lower interest rate, you can realistically save money over the life of the loan.

With a home equity loan, on the other hand, you’re actually creating another loan that places a second lien on your property. As such, you’ll have two mortgage payments to make each month to cover both mortgages. And since there are no changes being made to your current mortgage, you can’t take advantage of a better interest rate as you would be able to with a cash-out refinance.

At What Point Does a Cash-Out Refinance Make Financial Sense?

Before tapping into a cash-out refinance, there are certain times or situations that make this type of program potentially beneficial for you.

Today’s interest rate is much lower than your current rate. Depending on when you locked into your mortgage, the current rate may be a lot lower than what your original mortgage was charged. If there is a significant difference between your rate and the rate that you can get with a cash-out refinance, it might make sense to take advantage of this program to save a ton of money that would have gone towards interest rate than your principal.

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You’ve built up enough equity in your home. Obviously, there needs to be a sizeable amount of equity in your home in order to be able to use it for whatever purpose you so choose before you even consider a cash-out refinance. Take a look at your loan-to-value (LTV) ratio, which is the amount of your home loan relative to the value of your property. The closer this number is to 80%, the better.

Your home value has increased a significant amount. One way to build up equity is to make regular mortgage payments on time every month over the years. But another way to build up equity is through the appreciation of your home’s value.

For instance, if you purchased your home for $350,000 10 years ago and your home is now worth $600,000, that’s $250,000 worth of equity that you’ve been able to take advantage of thanks to the increase in the value of your home during that time. In fact, appreciation in value is the fastest way to build equity.

You have a valid reason to use that cash. If you have a pressing expense to cover that requires a large sum of money, a cash-out refinance may be justified. Coming up with the liquid cash needed to pay for certain expenses can be challenging when you factor in all the other regular expenses you’re responsible for covering every month. Certain instances warrant a cash-out refinance, such as:

• An expensive medical procedure

• Your grown child’s college tuition

• A home renovation project

Other than expenses such as these, you may also want to use that cash to pay off your high-interest debt. In fact, debt consolidation is one of the most popular reasons why homeowners opt for a cash-out refinance.

Some types of debt tend to come with sky-high interest rates that make it nearly impossible to completely pay off as a result. By pulling out some of your home equity through a cash-out refinance at a low rate, you can save yourself quite a bit of money that would otherwise have been spent in interest payments every month. And paying off high-interest credit card debt can have a positive impact on your credit score.

The Bottom Line

A cash-out refinance can certainly come in really handy to pay for many of life’s large expenses and to consolidate your debt, as long as you are qualified for such a program. That said, opting for a cash-out refinance should only be done after careful consideration of your finances and your current home equity.

Whatever you do, don’t max out on your home’s equity. If you do a cash-out refinance, consider leaving at least 20% of your home equity so you have a financial cushion to fall back on if you ever find yourself struggling to pay your mortgage.

Why You Should Think About a Home’s Resale Value When You’re Buying it

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When you’re buying a new home, the last thing you’re probably thinking about is selling it. But not only should you consider how well the home will suit your lifestyle, you should also be thinking about how easy it will be to sell at some point in the future and what its potential value will be.

Even if your current intentions are to stay put for the long haul, anything can change in the future. You might be relocated for your job, or you might suffer a loss of some sort that will warrant a change. Whatever the case may be, considering the resale value of the home you intend to purchase is the smart thing to do.

Look at the property objectively from a future buyer’s perspective. Features that may not necessarily be important to you might be important to the next buyer, and vice versa.

Location

The first – and most important – feature to consider when it comes to ensuring that your home will hold its appeal is the location. Obviously, this is a critical factor to consider for yourself as the location of your home will impact your everyday life.

If you choose a to buy a property in a desirable location, chances are that location will continue to be valuable well into the future. In addition, the home will likely increase in value over time, and in turn, you should be able to attract a larger number of buyers. On the other hand, a location that is not as desirable will have a damper on the future sales price that your home may be able to command as well as the number of buyers it will attract.

That said, anything can happen. Desirable neighborhoods can go downhill for many reasons, while less favorable neighborhoods may experience revitalization that can have a positive impact on the area and the homes within it. In addition, what may not be nuisance for you doesn’t mean it won’t be for future buyers.

A property’s location is its number one selling factor. Choosing a spot that’s in close proximity to employment, good schools, shopping, health care centers, and public transportation is typically regarded favorably and is more likely to remain valuable well into the future. The key is to buy a home that is likely to appeal to the largest pool of prospective future buyers. Taking this into consideration when you’re buying can help increase your resale value in the future.

View

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When choosing the location of your home, it’s also important to consider its views. Obviously, it’s much more pleasant to have views of green space rather than a view of an industrial building, and the former would certainly command a higher value than the latter. But be sure to consider whether or not the view is worth paying the extra money for it and if the view will have an effect on the future sale price, particularly if there are plans for any nearby construction.

It should also be noted that buyers in some locations might not necessarily place as much importance on the view for resale value compared to things such as location or size. It’s important to understand your real estate market before placing too much weight on the view.

Lot Size

The lot size and features also play an important role in the future resale value of your home. Generally speaking, a larger lot is perceived as more valuable to prospective buyers than a smaller lot. That said, the lot shouldn’t be so large that it can actually turn off buyers who may see the property as more maintenance than they care to handle.

The features of the lot matter, too. For instance, a flat property is typically more convenient and functional than a lot that is significantly sloped. Where the lot is located in relation to the neighborhood also needs to be considered. A lot on a private cul-de-sac is regarded more favorably than a lot of the same size on a corner near the main road, for example.

House Size

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In the same way that the lot size matters, so does the size of the home. Ideally, the square footage should be similar to other homes in the area. A home that’s much larger than all the other properties on the block will probably be devalued, while homes that are too small may not be desirable to future buyers. Homes don’t necessarily have to be “cookie-cutter” as far as size is concerned, but the home you buy shouldn’t be too different than the others in this respect.

Number of Bedrooms and Bathrooms

If buyers in the neighborhood typically look for nothing less than three bedrooms and your home only has two, this could be a major drawback in terms of resale value. While you may be paying less for the home when you buy it compared to other homes on the street with an extra bedroom or two, you’ll need to accept the fact that you’ll be selling it for less in the future.

The number of bedrooms is one of the main needs of buyers. The best value for a home as far as bedrooms is concerned is typically three or four. Young buyers typically look for a minimum of three bedrooms while four bedrooms can attract even more buyers. Any less will likely be viewed unfavorably. If you choose to opt for 5 or more bedrooms, make sure there is a potential market for this type of home and that you’re paying appropriately for the area, regardless of how many bedrooms there are.

As far as bathrooms go, a minimum of 2.5 bathrooms is best. Homes with one bathroom probably won’t get as much attention. One bathroom should ideally be located on the main level for guests, with a second bathroom close to the bedrooms. A master ensuite bathroom can add even more resale value.

One thing to consider if you’re thinking of buying a one-bedroom home is that if you add another bathroom (if the layout and size permit), you may be able to add some extra value into the home yourself that will bring in a decent ROI when you sell in the future.

Layout

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The layout of a home is a crucial component in terms of resale value that needs to be taken into consideration. Typically, an open concept layout is what many buyers look for in a home for maximum function and flow. That said, you may be able to add some resale value to a home by knocking down some walls or reconfiguring the layout. Not only will this increase the home’s value, it can also help make it more practical and enjoyable for you.

Storage

One of the main features that buyers tend to look at when looking for a home to purchase is the amount of storage space available. Ideally, the home should have some closet space at the front entrance, an adequate linen closet, and sizeable closets in each bedroom. There should also be space for storing all the larger things, such as garage space, a shed, or even room in the crawl space for additional storage accommodation.

The Bottom Line

Considering the magnitude of a home purchase, you want to make sure that the home you buy checks off as many things on your list as possible to suit your needs. But while you’re considering all the things needed to make life as convenient as possible for you, it’s also important to consider what future buyers might want as well. Thinking about the resale value of your home will help ensure that you attract a larger pool of future buyers and wind up with more money in your pocket.

What Real Estate Investors Need to Know About the 1031 Exchanges

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As a real estate investor, you’re likely already aware of the tax implications of selling investment properties and the profits made from such transactions. Normally when an investment property is sold for more than what was paid for it, capital gains tax needs to be paid on the profit. This can take a huge chunk off of your bottom line, but there’s this little thing called a 1031 exchange that can help keep some of that money back in your pocket.

Thanks to a 1031 exchange, real estate investors can defer paying capital gains taxes if the proceeds of the sale of one property are put directly towards the purchase of a new one. In this case, the transaction is seen as an exchange instead of a sale.

As good as this may sound, there are still some stipulations governing a 1031 exchange that all real investors should know about before taking advantage of them.

The Property Must Be For Investment Purposes

A 1031 exchange only applies to properties that are specifically bought and sold for investment purposes. That means you can’t take advantage of this tax tool when you sell your own personal residence. And while interests as tenants in common may qualify, exchanges of partnership or corporate stock interests don’t.

You Have 45 Days to “Designate” the New Property

From the moment you sell your original investment property, you have 45 days to find and “designate” in writing a new property that you want to buy. Any money that you make from the sale of the original property is held by a third party until the purchase of the new property closes.

The Deal Needs to Close No Later Than Six Months After Selling

The closing of the new property that you purchase needs to occur within six months (or 180 days) of the sale of the old property. You can’t drag on the closing of a new home if you want to ensure that your transaction qualifies for a 1031 exchange. This time period begins after you’ve found and designated the replacement property.

You’re Allowed to Identify More Than One Replacement Properties

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According to the IRS, real estate investors are allowed to identify up to three properties as the replacement property, as long as one of them results in a successful purchase. This gives investors some leeway in case one of the deals they may be working on falls through. 

That said, investors may be able to identify more than three replacement properties as long as they qualify under a specific valuation rule. In order to qualify for a 1031 exchange, the combined value of all identified properties cannot be any more than 200% of the value of the old property or properties.

The New Property Must Be Worth More Than the One Sold

In order to benefit from a 1031 exchange, the new property purchased needs to be worth at least the same amount as the property being sold. If you pay less for your new property, you’ll be stuck paying taxes on the difference between the two prices.

Any Reduction in Loan Liabilities Will Be Taxed

It’s important to take into consideration the mortgage that you carried for the old property versus the one you now carry with the new one. If your loan liability decreases, that amount can be taxed. For instance, if you carried a $700,000 mortgage on your old property and the mortgage on the new replacement property is $500,000, you’ll be considered to have a $200,000 gain that will be taxed.

The Bottom Line

The 1031 exchange is certainly a welcomed tool to help real estate investors reduce their tax obligations, but it still must be utilized properly in order to qualify and take full advantage of them. Before you decide to sell an investment property, speak with a professional accountant or tax consultant who can help guide you and ensure that all your ducks are in a row before you finalize any transaction.

Tips For Comparing Mortgage Loans With Different Lenders

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When it comes to obtaining a mortgage for a home purchase, you don’t necessarily have to use your everyday bank. Instead, you might be better off comparing mortgage packages with various lenders to see where you can get the best deal.

Much like shopping in the retail space, comparing different quotes from various lenders can help you find the best package and lowest rate, and therefore save you money. That said, how do you go about comparison shopping for a mortgage, and what exactly should you be comparing?

Here are some tips to remember when comparing lenders for your mortgage.

Compare Apples to Apples

When speaking with different lenders, be sure to ask the same questions about the same type of mortgages. Different mortgage types tend to come with slightly different terms and rates, so it’s best that you compare the same types of loans in order to get an accurate idea of which lender is offering a better deal. For instance, a 15-year adjustable-rate mortgage should not be compared to a 30-year fixed-rate mortgage, as the terms and rates will likely vary between the two.

Compare Interest Rates

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The interest rate is one of the most important factors to consider when comparing mortgages from different lenders, so you should pay particular attention to this.

It should be noted, however, that lenders don’t exactly have total control over the current mortgage interest rate, which instead is set by outside market forces, predominantly by the secondary market where mortgages are bought and sold.

That said, the rate that lenders quote is typically based on the type of borrower, though they will keep their rates competitive with each other. Lenders have various methods and models for assessing how much risk is associated with different borrowers, as well as for pricing loans based on the perceived risk of the borrower.

Discounts are generally made available to those with a healthy credit or financial history, and some lenders may be willing to tweak the rate based on the length of the mortgage requested and the down payment amount.

While one lender may look at you as a very low-risk borrower based on your financials, another lender may have an issue with how much debt you have relative to your income. In this situation, the first lender may be more willing to give you a lower rate compared to the latter. Though they are certainly trying to make as much money off you as possible, lenders typically quote rates based on their perceived risk: the lower the risk, the lower the rate, generally speaking.

FHA, VA and USDA mortgages will have a slightly lower interest rate compared to a conventional mortgage in the majority situations. However, you’ll need to factor in the up-front mortgage insurance and annual mortgage insurance with FHA loans before making an accurate comparison.

Compare Total Closing Costs

The interest rate will certainly have a huge impact on the overall cost of your mortgage, but the closing costs will also play a key role. Closing costs are fees associated with the cost of your mortgage, including the fees that lenders charge to approve and process your home loan. These fees can include things like title, escrow, and transfer charges. 

Every lender will have a different fee structure for their home loans, and these numbers can vary a great deal. Consequently, it’s imperative that you obtain a detailed estimate of these fees to identify how much the mortgage is going to cost you.

The Annual Percentage Rate (APR) is a helpful tool to use when it comes to comparing total closing costs and fees between different lenders. While the interest rate reflects the current cost to borrow, the APR offers a clearer picture of the cost of borrowing because it also accounts for lender fees associated with financing the mortgage.

The APR will prove to be a very helpful tool when comparing one mortgage to another from different lenders. If two lenders are quoting the same interest rate for the same loan program, the APR will help you identify which lender is charging more in fees.

Compare Points

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Points are fees that are paid directly to the lender at closing in exchange for a lower interest rate. Also referred to as “buying down the rate,” points can help you reduce your monthly mortgage payments. Each point costs 1% of your mortgage amount, and the majority of lenders will allow you to choose from many points and rate combinations. As such, it’s a good idea to compare the related points when comparing rates from different lenders.

Compare Loan Features

Aside from the interest rate and points, there are other features of a mortgage that you will want to ask about. In particular, such features include credit and cash reserve requirements, conversion options, and mortgage insurance payments.

Another important feature to ask about is the prepayment penalties, which are agreements between lenders and borrowers that stipulate how much is allowed to be paid off and when. The majority of mortgage lenders permit borrowers to pay off as much as 10% to 20% of the home loan balance every year. But again, this number can vary, so you’d be wise to inquire about it with different lenders.

Compare Lock-In Periods

The interest rate and the points that each lender quotes you are only guaranteed during what’s known as a “lock-in period.” The more common lock-in periods are usually anywhere between 30 to 60 days, during which your quoted rate and points cannot be changed. However, this time period can differ from one lender to another. Generally speaking, longer lock-in periods usually mean higher loan prices.

The Bottom Line

There’s a lot that goes into comparing home loans from different lenders. When questioning lenders, be sure to have a prepared list of questions that you want to have answered.

To make things easier for you, it might be a good idea to employ the services of a mortgage broker who will do the legwork for you comparing different mortgages with different lenders. While they do charge a few for their services, they may actually be able to save you money at the end of the day by finding the most affordable mortgage available.