With LIBOR Low, Don’t Rush To Refinance Your ARM

Is your mortgage scheduled to adjust this season? You may want to let it. This year’s ARM-holding homeowners in CA are finding out that an adjusting mortgage may be the simplest way to get access to today’s low mortgage rates — without paying the closing costs.

Currently, conventional adjustable-rate mortgages are adjusting to near 3.00 percent.

If your home is financed via an adjustable-rate mortgage, you’re likely cognizant of your loan’s life-cycle. At first, your ARM’s initial mortgage rate is agreed upon between you and your lender, a rate that both parties agree will remain in place from anywhere from one to 10 years, with periods of five and seven years being most common.

Then, after the initial “teaser rate” expires, the mortgage’s mortgage rate adjusts according to a pre-determined formula — one that’s also agreed upon at closing. The loan is then subject to an identical mortgage rate adjustment every 12 months thereafter until the loan is paid in full.

The most common conforming mortgage adjustment formula is to add 2.25 percent to the then-current 12-month LIBOR rate.

Today’s 12-month LIBOR is 1.05% so, as a real-life example, an adjustable-rate mortgage that’s leaving its teaser rate period this week would adjust to 3.30%.

If you’re a homeowner who took a 7-year ARM in 2005, or a 5-year ARM in 2007, your newly-adjusted mortgage rate should be roughly 2 percent lower than your initial teaser rate. On a $250,000 mortgage, a 2 percent mortgage rate reduction yields $298 in monthly savings.

Therefore, if you have an adjustable-rate mortgage that’s due to reset, don’t rush to refinance it. For at least one more year, you can benefit from low mortgage rates and low payments.

As for next year’s adjustment, however, that’s anyone’s guess.

Reverse Mortgages : Pros And Cons

Despite several big-name banks pulling the product from their respective home loan offerings, reverse mortgages remain a popular mortgage choice among homeowners aged 62 or over.

A reverse mortgage is exactly what it sounds like — a mortgage in reverse. Rather than borrow a fixed amount of money then pay that loan balance down to zero as with a “forward” mortgage, a reverse mortgage starts at a given loan balance and works its way up as scheduled payments are added to the existing loan balance.

This 4-minute piece from NBC’s The Today Show highlights a few pros and cons of reverse mortgages, and the reasons why you may want to consider one, including :

• No mortgage payments are ever due on your home
• There is no credit check required for a reverse mortgage
• There is no income requirement to qualify for a reverse mortgage

There are some basic qualification standards for the reverse mortgage program including a requirement that all borrowers on title must be 62 years of age or older; and that the subject property be a primary residence. Loan fees can also be higher than with a conventional-type mortgage.

If you meet the qualification standards, though, with a reverse mortgage, you have flexibility in how your home equity is distributed to you. You can receive a lump-sum payment, elect for monthly installments over time, create a line of credit, or a combination of all three. 

Like all mortgages, reverse mortgages are complex instruments. That’s one reason why all reverse mortgage borrowers are required to attend counseling — the government wants you to be certain that you understand the nuances of the reverse mortgage program.

Your lender will want you to understand the program, too.

How To Seal A Granite Countertop

Among Palm Springs Real Estate homeowners, granite countertops remain a popular kitchen and bathroom finishing choice. Granite boasts a combination of natural beauty and durability that’s unmatched among most commercial options.

But different from many other countertops choices, granite is a natural material; mined from the Earth. It is porous and highly absorbent.

To protect the granite in your home, therefore, and to ensure its quality over time, you’ll want to seal your countertops at least once annually. A proper granite sealing will prevent stains and damage that can ruin your countertops’ appearances.

Sealing your granite countertops is a simple job, but one that requires a little bit elbow grease.

First, you should make sure your granite is actually ready to be re-sealed. To do this, soak a white cotton cloth in water and leave it on the corner of your countertop for a 10 minutes.  Lift the towel and check whether the area under the towel is discolored, or dark. This will indicate that your granite is absorbing liquid and needs sealing.

If the area is not disclored, your granite is already sufficiently sealed.

If your countertops do need to be sealed, here’s how to do it :

1. With a spray cleaner, wipe down the entire surface and allow to dry
2. Using a clean white rag, apply granite sealer to the surface uniformly
3. Allow 30 minutes for the granite to absorb the sealer, or longer
4. When dry, re-apply a second coat of sealer

Depending on the thickness and quality of your home’s granite, it may need to dry overnight so allow yourself the proper time to finish the job.

Once sealed, use preventative maintenance to keep your granite countertops looking great. Place coasters under beverages, hot plates under dishes and clean up spills immediately.

A well-cared for granite countertop will last for years.

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