Rising Balloons Can Be Financially Deflating
fter 90 days of rapidly rising mortgage rates ''balloon'' mortgages are in vogue again.
Beware of the hot air.
Lenders and brokers hawk balloons because typically they are
cheaper than 30-year fixed rates. Even though balloons aren't as cheap as one-year
adjustable rate mortgage's (ARM) first year rate, they are often a better deal during the
second year when the ARM jumps.
When rates rise quickly, as they have recently, a balloon
mortgage's savings, well, balloons. Typically requiring 10 percent down, balloon mortgages
are conforming mortgages ($240,000 or less) that are often called ''30-due-in-5'' or
''30-due-in-7'' loans. They are amortized over a 30-year schedule, but after five or seven
years of payments, the loan matures and a big fat balloon of a balance is due, hence the
name ''balloon'' mortgage.
At maturity, you can pay off the mortgage, refinance, or in
some cases, convert or reset the loan's interest rate for the balance of the 30-year
fixed-rate loan. Unlike ARMS which reset or adjust
repeatedly over the life of the loan, resulting in multiple changes to the monthly
payments, convertible or reset balloons come with only adjustment, Freddie Mac says.
When Can We Move In?
M any buyers wonder when they
actually can move into their new home. They wonder when possession actually takes place.
Most buyers take possession of their home the day of closing. The keys and other security
devices are handed from the seller to the buyer at the closing and the house has
officially changed ownership. In some areas the seller retains possession at no cost for
three to five days after closing, but the customary day of possession is the day of
closing. You do not need to wait to move in until you receive the deed, which will usually
be mailed to you from the recorder's office after it has been properly placed in the
Sometimes possession is given to the buyer before the
closing and other times the seller may need to stay on in the property after closing, and
possession is given at a later date. Sometimes the day which is set for the closing and
the day the buyer is scheduled to take possession is used as a negotiating tool. The buyer
may allow the seller to stay on after the close of escrow, for example, in exchange for
some reduction in the purchase price. Or, if the buyer needs to move in before closing,
the seller will often let him take possession early. The seller may prepare an occupancy
agreement, which is a form of a lease for the property. This lease agreement would cover
the time which the buyer intends to occupy the property prior to the closing date. This
type of lease is normally on a
Setting The Stage Sells
he age-old observation that "you never get a second chance to make a first
impression" certainly applies when it comes to attracting buyers to a home for-sale.
Making a good first impression can mean the difference between receiving serious offers
for your home or being subjected to months of lookie-loos dropping by but never buying.
How can you ensure that your home will make the best
impression possible? Here are six tips for savvy home sellers:
1. Focus on curb appeal. The outside of your house
can be the source of a very good first impression. Keep the grass well-watered and mowed.
Have your trees trimmed. Cut back overgrowth. Plant some blooming flowers. Store toys,
bicycles, roller-skates, gardening equipment and the like out of sight. Have at least the
front of your house and the trim painted, if necessary. Sweep the porch and the front
walkway. After dark, turn on your front porch light and any other exterior lighting.
2. Clear out the clutter. Real estate agents say
buyers won't purchase a home they can't see. If your home has too much furniture,
overflowing closets, crowded kitchen and bathroom countertops or lots of family photos or
collectibles on display, potential buyers
Angela Burdick combines many years' experience, a thorough understanding of the real
estate market, and cutting-edge technology to provide buyers and sellers with competent
advice and proven results.
View June's Issue