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Refinancing Options in Today's Market

by Steve Westmark

STEVE:  Hi, this is Steve Westmark, Counselor Realty.  Thanks again for watching my video blog this week.  I thought this week it would be real interesting to have Jill Meents from Bell Mortgage back in to talk about interest rates and refinancing on properties.  So welcome, Jill.

JILL:  Thank you.

STEVE:  Well, recently the interest rates have been dropping again, and I think we’re at probably a 30- or 40-year low for interest rates.  Jill, when does it make sense to refinance your home mortgage?

JILL:  Great question, Steve.  You know, there used to be the golden rule that you really needed to wait until your new interest rate was at least 2% below what your current rate is.  But that no longer holds.  So the first question I ask someone when they call is “What are we trying to accomplish?”  Are we trying to shorten up the interest rate term?  Are we trying to drop the interest rate?  Are we paying off other credit card debt or other debt? 

Are we trying to pay off a home equity credit line?  Are we trying to refinance out of an arm into a fixed rate?  Or are we trying to take cash out of the property?  And it just depends.

STEVE:  So Jill, what does it mean when you say you’re going to cash out?

JILL:  What I mean when I say in refinance where we’re going to take cash out, it just means that we’re going to be doing something with the proceeds of the new mortgage other than paying off the first mortgage and/or the second mortgage that was put on the property at the time you purchased it.  So as an example, you might have a home equity credit line that you put on your property after you purchased it. 

If I’m going to pay it off with the new refinance, technically, the lender considers that cash out.  Or perhaps you’re going to pull cash out of your home to pay off other credit card debt that has a higher interest rate and non-deductible interest.  Or perhaps you might even be looking to invest in other real estate, buying a second home or an investment property and you’re taking the cash from your primary home, pulling it out, and using it to make the new purchase.

STEVE:  So Jill, do people who refinance get the same rate as a new home purchaser does?

JILL:  Steve, in most circumstances, the interest rates on refinances are going to be a little bit higher than they are if you do a home purchase.  So in other words, if a borrower comes in to purchase a home, they’re going to get the best pricing.  The next best pricing is if we do what we call rate term refinance where I’m only paying off the current mortgage and perhaps financing their closing costs.  Then the next best rate would be if they are going to be cashing out of the property.

We talked about pulling cash out.  And then the last rate would be on an investment property.  If you’re either buying an investment property or refinancing an investment property, those rates tend to be about a half a percent to perhaps 5/8 of a percent higher.

STEVE:  Well, Jill, thanks for coming in today and maybe just finish up by explaining what are the advantages and disadvantages of using your current lender to get your property refinanced.

JILL:  Good question.  If you’re going to be using your current loan servicer, the good news is you know who they are and you probably have an 800 number on your monthly bill.  The challenging part is those large loan servicers are so doggone busy right now that they’re taking days and sometimes even weeks to return calls.  Many times, you don’t get the best pricing from them because they assume since you’re already a client that they don’t need to give you the most competitive financing.  So your rate might be a little bit higher. 

So it definitely pays to go back to the loan officer who originated your original loan or if you don’t know who that is or perhaps they’ve left the business, I’d love to talk to you.  And you can certainly reach me at 952-278-8731.

STEVE:  Thanks, Jill.

Benefits of Selling Your Home with a Home Warranty!

by Steve Westmark

STEVE:  Hi.  Thanks for watching my video blog this week.  Today, I invited in Mark Espersen of Bonfe Home Warranty Services, and we’re going to talk a little bit about home warranties.  Welcome, Mark.

MARK:  Thank you very much, Steve.  It’s wonderful to be here.

STEVE:  Well, when you’re buying a warranty program for a property, tell me Mark, what goes into a warranty program and what kind of things are covered on warranties.

MARK:  Well, Steve, those are good questions.  First up, a warranty is just a peace of mind plan.  It’s a way to protect your home during a listing period and it protects your mechanical systems.  Your furnace, your air conditioner, your water heater.  It also protects you in plumbing like your pipes, your toilets.  Electrical.  Your electrical boxes, outlets, doorbells.  And then it also protects your appliances, washer, dryer, refrigerator.  So those are the items it protects it while you are listing that home.

STEVE:  I talk to many sellers, and as I talk to them about marketing their home, I talk to them about home warranties.  Why do you think it’s important to do a home warranty as a seller?

MARK:  Well, the reason I would do it if I was selling my home, there’s a few of them.  One, I’m selling that home and I want a peace of mind that during that listing period if something should break, I’m not putting a bunch of my money back into that home.  If the air conditioner goes down and it needs to be replaced, I’m not spending a full amount of my money on it.  The first $500 of this warranty would cover the replacement cost of that air conditioner.  That’s one of the reasons.

The second reason is I think it looks very attractive to a potential buyer since a lot of buyers these days are either first-time homebuyers or single women buying homes.  And so I think it looks attractive to them to buy that home.  And the third thing, the reason I would put it on there is that with a new purchase agreement, there’s lines on their that talk about home warranties and more than not, they’re going to ask for a home warranty during the purchase agreement.

STEVE:  I’m going to guess, Mark when I’m out showing the buyers I work with that about 50% of the properties have home warranties on them or maybe even less.  Why would a buyer ask for a home warranty or even if a seller wouldn’t pay for a home warranty, why would they go ahead and buy a home warranty at the time of purchase agreement?

MARK:  Right.  Well, again, if I was out buying a home, I know nothing about that property nor do I know anything about how they being the seller took care of their air conditioner and furnace.  Did they had a tune up done every year?  And so without that knowledge of how things were taken care of, I would want that plan on that property.  I would want to know that if my furnace broke going into the fall that I could have it replaced or repaired for up to $2,000 because now I’m the buyer of that warranty.

So that’s what I would do.  I would just protect myself going into a property that I know nothing about and I would have 13 months of protection.

STEVE:  Well, I know there’s variations in the plan for pricing on this, but for a basic home warranty, what does it cost and how will people get a hold of you, Mark, to get a home warranty put on their properties?

MARK:  Well, out basic plan is we have one plan that covers both the seller and the buyer about the same.  And that coverage is our basic plan for $390.  And we are running a special currently from now until the end of the year for all new listings.  So you being the agent, any new listings that you should bring on board from now until December 31, you can offer our basic home warranty for $250.  And the best way to get a hold of me would be either by my cell phone at 612-221-9112 or they could reach me by my e-mail at

STEVE:  Thanks.

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Photo of The Steve Westmark Team Real Estate
The Steve Westmark Team
RE/MAX Advantage Plus
14451 Highway 7 Suite 100
Minnetonka MN 55345
Fax: 952-241-1600