FINANCE, HOMEBUYERS
The Real Mortgage Rate – Or Is It?
Advertised rates look tempting, but don’t be fooled into thinking that’s the rate you’ll pay. You have to qualify to receive the best rates with excellent credit and work histories. According to BankofAmerica.com, interest rates are the annual cost of a loan to the borrower expressed as a percentage. The annual percentage rate or APR, is the annual percentage plus other fees, including mortgage insurance, many closing costs, discount points and loan origination fees.
The Federal Truth in Lending Act requires lenders to disclose the APR in advertising and in loan agreements. When you apply for a mortgage loan, the APR will be listed in the loan estimate your lender is required to give you. ConsumerFinance.gov recommends that you get estimates from other lenders for the same loan, so you can compare fees. Compare the loan estimates by looking at page one under loan terms. You’ll find the APR on page 3 under “Comparisons.”
APR comparisons are easiest to understand if you’re applying for a fixed-rate mortgage. For adjustable rate loans or ARMs, APR estimates are based on the initial fixed rate period of the loan. While ARMs have rate-hike ceilings, the APR is much higher when interest rates rise during adjustment periods.
Lenders can charge consumers high or low interest rates, and they have flexibility in which fees they include or exclude in the APR, so compare interest rates and APRs carefully. If you don’t understand the purpose of any fee, ask your lender to explain.
HOME IMPROVEMENT, HOMEOWNERS, HOME SELLERS, HOMEBUYERS
Supplement Your Income by Renting Out a Room in Your Home
We’re living in a sharing economy, says Realtor.com, so it should be no surprise that 69% of homeowners in a recent survey would rent out part of their home if it had a separate entrance, kitchen and bathroom and 32% have already rented out a room, space or outdoor feature on their property.
You can generate extra income by renting out a space in your home, but the price is a loss of privacy. You’ll be a landlord, so you’ll need to know about renting as a business, your community’s regulations and fair housing laws.
Rentprep.com recommends finding out about your homeowners’ association regulations, town zoning laws or ordinances, and fair housing laws. You may need a permit and may be required to provide a separate private entrance for the renter’s use, a private bathroom and a way for the tenant to lock up their belongings.
Renting to a roommate/housemate is a little different than typical federal fair housing laws allow. You can advertise for a male or female roommate, for example, if you’re sharing the house, but if you’re renting a separate space like a garage apartment, fair housing laws would apply.
Ask your homeowner insurance agent to see if you need extra or specific coverage. Keep careful records including utilities and maintenance costs to report the extra income correctly. Take photos of the space to show how it looks before a renter moves in.
To find renters, look for organizations such as college housing advocates, Travelnursehousing.com, and senior centers.
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