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A Simple Guide to Mortgage Loans

by The Hat Team

When purchasing a home, the many different loan options available to you can be a bit overwhelming. With different names, various term lengths and many other factors on the table, it can be confusing trying to figure out which loan is best for you. While your mortgage lender and your Realtor can both answer questions you may have, it’s still smart to do your own research so that you have a basic understanding of mortgage loans.

Let’s focus on the two major options that affect your mortgage: the term of the loan and the type of interest rate attached to it. The term of the loan is the amount of time you have to pay it off.  Two of the most common loan terms are 15-year and 30-year loans. There are pros and cons to both. In addition, there are two types of interest rates to choose from: a fixed-rate or an adjustable-rate. Each type of loan combination has perks that meet your specific needs and will determine your monthly payment and the total interest you will pay.


First we will look at a 15-year fixed-rate mortgage loan.

This is a loan that you pay back over 15 years with the same interest rate throughout the life of the loan. One of the biggest benefits of a 15-year fixed-rate mortgage loan is that you will pay it off in half the time of a 30-year loan. Obvious, right? But what you may not realize is that you will also be paying less toward interest AND you will be building equity more quickly.  Paying your loan off faster means being able to use your hard-earned money for other things like retirement savings, college tuition for children, travel etc. However, while having a shorter term will often garner a lower interest rate, it still likely means higher monthly payments. And that is something you need to think about when deciding what kind of loan to pursue. For example, say your loan amount is $184,000 and you have a fixed interest rate of 7%.  You will pay about $1,650 a month with a 15-year loan verses about $1,220 a month with a 30-year term.  Since your payment will be lower with a 30-year loan, you might be able to qualify for a larger amount if you choose the loan with the longer term.


Shorter term loans usually have lower interest rates
. This is because the lender is taking on less risk when money is borrowed for a shorter amount of time and they are able to get their interest back sooner. Locking into an interest rate with a  fixed-rate loan means you will pay at that interest rate for the entirety of your loan term. Since rates fluctuate daily, this is a good thing. However, there is always a chance that interest rates could drop lower than your rate, in which case an adjustable-rate mortgage might be beneficial. Adjustable-rate loans are risky though, because your rate could also go much higher meaning higher monthly payments and more interest paid throughout the life of the loan. The main reason to think about getting an adjustable-rate mortgage loan is to get a lower monthly payment. Since you are taking on the risk of rates rising, the bank will often reward you with a low rate starting out.


Now, let’s look at a 30-year mortgage loan.
 

This is a home loan that will be paid off completely in 30 years as long as every payment is made as scheduled. Most 30-year mortgages are fixed-rate loans, meaning the interest rate will stay the same throughout the life of the loan. When you take out a 30-year loan, you may qualify for a higher amount than you would with a 15-year term. In addition, you will have lower monthly payments, making a more expensive home affordable for you. You also will enjoy the flexibility of being able to pay the loan off faster by adding to your monthly payment or making extra payments. But you can always go back to your regular payment when you can’t afford to do more. It’s easier to qualify for a 30-year loan and with the lower payments, you might have money left over each month for other things like savings, travel, etc. Just keep in mind that with a 30-year mortgage you will likely be paying a higher interest rate as well as more interest over the years, and you won’t be building equity as fast as you would with a 15-year mortgage.

Choosing what mortgage works best for you is a personal decision based on your needs.  Again, your mortgage lender and Realtor can help you do the math to determine what type of loan is going to give you the best outcome.

If you are in the market to buy or sell a home (or both), let me, Sandra Nickel, and my Hat Team of Professionals assist you with all your real estate needs! Call us today at 334-834-1500 and check out https://www.homesforsaleinmontgomeryalabama.com for more information.

Photo credits: texasunitedmortgage.com, corbymortgage.com, totalmortgage.com, mortgagemoon.com

3200 Norman Bridge Rd: South Hull District Home with Great Layout!

by The Hat Team

3200 Norman Bridge Road, Montgomery, AL 36105

MLS# 529118

3 Bedrooms | 2 Full Baths | 1 Half Bath | 2,230 Square Feet | South Hull District

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This S Hull District home is perfectly livable as it stands and would also be a great opportunity for an easy fix-and-flip! Good bones! Kitchen and downstairs bath have already had updates. Great layout and large rooms, big corner lot with detached 2 car garage. Convenient location.

Marketed by Montgomery AL Realtor, Billy Young, Sandra Nickel Hat Team

4340 Hillside Oaks: Pristine Patio Home in Lovely Hillside Oaks!

by The Hat Team

4340 Hillside Oaks, Montgomery, AL  36109

MLS# 529052

2 Bedrooms | 2 Baths | 1,067 Square Feet | Hillside Oaks

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This adorable and pristine patio home is just right for the first time homebuyer and would be a great addition to any investment portfolio! Easy to care for vinyl flooring, good sized great room with fireplace, and updated kitchen with granite countertops make up the living spaces. Two nicely proportioned bedrooms each with private bath. Great side deck, rear patio, and covered porch all overlook privacy fenced backyard. Move-in ready and convenient to shopping and dining! Would make a great AIR B&B as well!!

Marketed by Montgomery AL Realtor, Billy Young, Sandra Nickel Hat Team

356 Cloverdale Road, Montgomery, AL 36104

MLS# 527661

2 Bedrooms | 2 Baths | 1,589 Square Feet | Garden District

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This updated Garden District home beckons a gentile era of porch sitting and visiting with neighbors. The inviting front porch is perched well above street level offering nice views of the streetscape. Inside, enjoy classic architectural features like coffered ceilings, French doors, and spacious rooms with nice flow. The dining room has a cool wet bar with shiplap accents. Updated kitchen has cozy nook for casual dining. Both bathrooms have had nice updates and are modern-looking, while still retaining some old-house charm. Bonus room off main bedroom could be den/study, nursery, dressing room, or could be easily converted to a large walk-in closet. Private side deck offers a quiet place for relaxation or entertaining, and the manageable back yard has new privacy fence. Vintage detached garage can't be used for car storage any longer, but makes great storage area for garden tools, bicycles, and lawn equipment. Located in Midtown Montgomery close to interstate and downtown, and literally a block from Cloverdale's shopping, dining, and entertainment district!

Marketed by Montgomery AL Realtor, Billy Young, Sandra Nickel Hat Team

90 Timberland Ln: Custom-Built Home Boasting Stunning Features!

by The Hat Team

90 Timberland Lane, Millbrook, AL 36054

MLS# 527556

4 Bedrooms | 3 Full and 1 Half Baths | 2,750 Square Feet | Live Oaks Estates

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This beautifully maintained and custom-built home boasts many stunning features from the time you walk through the door! This home has soaring ceilings and a wonderful open floor plan with a formal dining area, large great room with fireplace, kitchen with an eat-in area and beautiful oak cabinets, screened-in back patio and much more! The master suite has its own wing with a separate shower, jetted tub, double vanities and more! The upstairs bonus room has a full bath and is equipped with surround sound. 2-car insulated and heated garage. There is also an 18x40 covered RV shed and a utility shed in the back. You will love it!

Marketed by Montgomery AL Realtor, Joy Randolph, Sandra Nickel Hat Team!

529 Felder Ave: Charming Home in the Heart of Old Cloverdale!

by The Hat Team

529 Felder Avenue, Montgomery, AL 36106

MLS# 526395

3 Bedrooms | 3 Baths | 2,776 Square Feet | Old Cloverdale

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Check out this location in the heart of Old Cloverdale! Step into a huge living room with fireplace that looks into the dining room and has a great sunroom off of it that's perfect for an office or playroom. This charming house has beautiful hard wood floors and high ceilings. All the bedrooms are spacious including the large den and enormous laundry room with lots of cabinets. Large, private, side deck, a partially fenced back yard, and detached carport. Midtown Montgomery restaurants, bars, and shopping are just around the corner.

Marketed by Montgomery AL Realtor, Lauren Keen, Sandra Nickel Hat Team!

642 Doris St: Cozy 2 Bedroom Ridgecrest Home!

by The Hat Team

642 Doris Street, Montgomery, AL 36105

MLS# 526309

2 Bedrooms | 1 Bath | 891 Square Feet | Ridgecrest

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Cozy 2 bedroom, 1 bath home ready for a first-time home buyer or investor looking to add to their rental portfolio! This house has been freshly painted both inside and out. The living room has hardwood floors and nice natural lighting. The eat-in kitchen features a new tile backsplash. Both bedrooms are nicely sized with new carpeting. Outside you will find a spacious backyard along with a storage shed. Check this one out before it's gone!!

Marketed by Montgomery AL Realtor, Alison Bertschy, Sandra Nickel Hat Team!

168 Cobb Ridge Rd: Move-in Ready Charming Cobb Ridge Home!

by The Hat Team

168 Cobb Ridge Road, Millbrook, AL 36054

MLS# 525914

3 Bedrooms | 2 Baths | 1,719 Square Feet | Cobb Ridge

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This Cobb Ridge charmer is so conveniently located and ready to move into! Foyer, dining room, kitchen and breakfast room have good-looking and easy-maintenance vinyl plank flooring. Kitchen features 5 burner gas range and built-in microwave. Large living/great room has gas fireplace and overlooks covered rear patio and shady back yard. Split plan buts main bedroom towards the rear of the house, with two other bedrooms and hall/guest bath on the front side for owner privacy. Large main bedroom features classic trey ceiling. Large main bath has double vanity, WC, garden tub AND separate shower, plus a HUGE walk-in closet! Attached two car garage to protect your cars and keep you out of the elements! Large back yard is shady, fully fenced, and has a great custom workshop. Relax on the covered back porch and enjoy the serenity of the large lot.

Marketed by Montgomery AL Realtor, Billy Young, Sandra Nickel Hat Team

What Happens When You Inherit a House?

by The Hat Team

Inheriting a house may provide financial gain, but it also comes with legal and financial responsibilities. In addition, it will likely include an emotional element, especially if you share the inheritance with siblings or other heirs. Navigating the process of either taking ownership of the house or selling it can be challenging and it’s important you that you do your homework and educate yourself about how the process works.

The first thing that has to be done when a house is inherited is to make a short-term plan for home maintenance for the duration of the time it takes to settle the estate. This is the time when discussions need to happen with other heirs to determine what the long-term goal is for the property.

Here are some issues that may come up when you inherit a house:

  • Expenses

Right away you will have to plan for the ongoing expenses involved in the upkeep of the house. These expenses include the mortgage, utilities, property taxes, homeowners’ insurance, repairs, and maintenance.

  • Insurance

When the homeowner passes away, the insurance policy for the home should be rewritten. Most insurance companies will allow the current policy to remain intact for a certain number of days to give you time to find your own coverage, as long as you continue to make the payments. However, it’s important to know that if the property goes into probate, you won’t be able to assume ownership during that time, and therefore won’t be able to get insurance in your name until that period is over. If you want to make sure the house is covered, have the executor of the estate contact the current insurance company to ask what the coverage options are. It is possible that you can get some short-term coverage while the house is in probate, but it might be very expensive. But it is vital that you maintain coverage until you can get a policy in your own name.

  • Mortgage

When you inherit a home, you are responsible for paying the mortgage. Payments must be kept up on the existing mortgage or you run the risk of foreclosure. If you aren’t sure if there is an outstanding mortgage on the property, you will want to check the home’s title, which should list the lender.

  • Other Expenses

It’s a good idea to run a title check on the property to find out if there are any liens or other outstanding debts on the home. Examples might be unpaid contractor bills or second mortgages. As the new owner of the home, you also inherit these debts.

What Can You Do with a House You Inherit?
 

  • Move In

One option is to make your inherited property your primary residence. This is a great choice if you can afford it. You may be thinking “Yay! Free house!”, but you really must think through all the expenses you will be incurring. In addition to the mortgage, you must think about property taxes, needed repairs, insurance, maintenance and more. If you inherited with other people, you also might have the expense of buying them out of their shares of the home.

  • Rent It Out

If you can’t (or don’t want to) live in the home full time, but you still want to keep it, renting it out is an option. Depending on the property you may want to find long-term tenants, or you may want to turn it into a vacation rental. Investing some money into creating a marketable rental could result in a nice source of income for you. Just keep in mind that being a landlord is a lot of work and responsibility.And it may become complicated if you own the home with siblings or other heirs. You will also want to consult a tax advisor to determine the tax ramifications of owning a rental property.

  • Sell It

Whether you inherit a house on your own or share the inheritance with others, it may be in everyone’s best interest to sell it. Selling may be necessary for numerous reasons. Maybe you can’t afford the mortgage and maintenance, or maybe you simply don’t want the headaches that come with renting it out or owning it with others. Selling it puts it behind you, so you don’t have to worry about it anymore. If you’re going to sell, it’s important to plan out how you are going to cover the expenses for preparing it and while it is on the market.

As stated above, inheriting a home can be great, but comes with a lot of responsibilities. Be sure to research and understand your options financially while also keeping in mind the emotional toll it will take. Reach out to experts who can help you navigate the process so you can make the best decision for you and your family.

If you are in the market to buy or sell a home (or both), let me, Sandra Nickel, and my Hat Team of Professionals assist you with all your real estate needs! Call us today at 334-834-1500 and check out https://www.homesforsaleinmontgomeryalabama.com for more information.

Photo credits: totalmortgage.com, legalzoom.com, travelers.com

5709 Blevins Cir: Spacious Brick Home in Lovely Taylor Lakes!

by The Hat Team

5709 Blevins Circle, Montgomery, AL 36116

MLS# 525769

4 Bedrooms | 2 Baths | 2 Half Baths | 2,568 Square Feet | Taylor Lakes

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Great design for easy living! This well-maintained brick home features graceful arches outside and in giving an air of elegance. Formal dining room has soaring ceiling and is bathed in natural light, and the great room also has 2-story ceiling height and gas log fireplace. Large kitchen has work island/breakfast bar and overlooks breakfast nook and has a pass through into the great room. Spacious main bedroom is also on the first floor and the main bath features double vanity, garden tub, tiled walk-in shower, and large walk-in closet (main bath recently renovated!) Upstairs there are three more bedrooms, on with ensuite bath and walk in closet that could be a second main bedroom. Den/family room on second floor overlooks the great room and foyer. Cozy covered front porch is great for relaxing and visiting with neighbors, and the private screened in porch out back is great for morning coffee or evening cocktails. Large, fenced backyard great for pets and outdoor entertaining.

Marketed by Montgomery AL Realtor, Billy Young, Sandra Nickel Hat Team

Displaying blog entries 151-160 of 1236

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