You lock into a fixed-rate mortgage at 5.5% when you first buy your home, and by the time you’re up for renewal, the mortgage rate is down to 3%.

While you’re not exactly disappointed that you’re now offered a lower interest rate – which equates to a lot of money saved in interest payments over the life of your mortgage – you can’t help but wonder why mortgage rates are prone to such wild fluctuations.

We’ve been in an extremely low mortgage rate environment over the past few years, which has made buying a home somewhat more affordable. But anyone – Baby Boomers in particular – who purchased a property back in the early 1980’s surely remembers when rates were ridiculously high – as high as 18.45%, to be exact.

Imagine paying for a home with that monster of a rate attached to the mortgage? It’s easy to understand how many homeowners ended up losing their homes simply because they were upside down in their equity.

The reasons for mortgage rates moving up and down like a roller coaster are wide in range, but the stock market is certainly a big player in the game.

Mortgage-Backed Bonds’ Influence on Mortgage Rates

While there are a few factors that contribute to which direction mortgage rates run in – namely inflation – the stock market is a key influencer.

But it’s helpful to take a step back to really get the gist of how mortgage rates are essentially determined. Mortgage-backed bonds (MBS) are at the root of changes in mortgage rates. Fannie Mae and Freddie Mac issue these MBS’s, which are backed by the interest that’s paid out by mortgage holders. Similar to the stock market, MBS’s are traded on an exchange.

An inverse relationship exists between mortgage rates and the price of MBS’s; when MBS prices go up, mortgage rates do down. The reverse is also true. 

Essentially, when there’s an increase in economic fear, there tends to be a mass exodus of investors from the stock market. Instead, these investors hedge their funds in safer Treasury bonds. With demand spiking for these bonds, yields drop – there’s simply no need to keep them up to attract investors. 

Conversely, a rally in the stock market encourages investors to sell these bonds in favor of purchasing stocks.

All this is based on the notion that both the stock and bond markets are vying for the same investment money. In other words, investor will choose to either invest money in the stock market or the bond market.

As a general rule of thumb, investors choose stocks over bonds when a greater return over time is sought, but stocks are also associated with heightened volatility. On the other hand, the returns on bonds are usually a lot lower compared to stocks, but they’re generally less volatile.

For this reason, investors typically turn to bonds to hedge their funds when the overall market and economy is unstable. 

If the stock market is down, it means investors are liquidating their stocks and buying into bonds. When this happens, bond prices soar, while mortgage rates plummet. And when the stock market is bullish, investors are likely selling their bonds and switching over to a more stock-heavy investment portfolio.

In this environment, mortgage rates rise as bond prices tumble following a surge in supply.

Of course, there are a host of other factors that influence how mortgage rates behave from one day to the next. But the stock market certainly has it’s role in the whole process.

Nevertheless, rates are incredibly low these days, and have been hovering around historical lows for years. It will be interesting to see how fast and far they climb in the near future given the current economic turmoil across global markets.

These days, it can be pretty tough to scrape together a good chunk of change to use as a down payment for a home. The financial recession, housing crisis, and weak job market hit a lot of Americans hard.

And the millennial generation of today is taking their time moving out of their parents’ homes specifically because they simply cannot come up with enough money to warrant a half-decent down payment.

In fact, more parents are helping out their adult children purchase a home these days compared to decades past; 17 percent, to be exact, according to a recent survey.

Depending on the exact type of property being purchased, its location, the lender, and the type of mortgage, the down payment on its own can be a huge sum. In order to help cover this expense, many buyers turn to family and friends to chip in. And while that’s helpful and all, there are actually certain rules that apply to this type of gifting before the funds can be used to put towards a home purchase.

The Money’s Got to Come From Family

While you might be generous enough to want to financially help out your co-worker’s niece or your best friend’s son to buy a home, your money won’t be good in these circumstances. You can gift down payment funds to your kids, grandkids, and even your siblings, but not to your neighbor, friend, or fourth cousin on your mother’s side.

Not only does it matter who is giving the money, it’s also necessary for the cash to be easily tracked. Lenders want to have total transparency when it comes to where the funds are coming from, and are cautious when it comes to all-cash gifts that are put towards a mortgage. If you’re going to give money as a gift for a down payment, do it through a wire transfer or check instead of cold-hard cash.

Avoiding ‘Gift Taxes’

Seems that Uncle Sam is always lurking when it comes to money, and that’s no exception in the case of gifted funds for down payments. In order to avoid paying taxes on your monetary gift, you need to stick to a cap of $14,000 per individual. However, you and your spouse could give up to $28,000 to one child, which implies two separate gifts. That number can be doubled if you and your spouse are gifting your child if he or she is married. Just make sure that each check is no more than $14,000 a-piece, or you’ll be dinged by the IRS.

Down Payment Borrower Contribution

The rules when it comes to borrower contribution as opposed to a gift will vary depending on the exact type of mortgage. For an average conventional mortgage, all of a 20 percent-or-more down payment can be in the form of a gift. If less than 20 percent is being put down, part of it needs to come from the individual receiving your monetary gift; this amount will vary by loan type.

Fannie Mae requires a 3 to 5 percent contribution from the borrower, and Freddie Mac requires a 5 percent minimum borrower contribution if the down payment is under 20 percent.

In addition, the transaction needs to involve a two- to four-unit property that’s either a primary or secondary home. VA and FHA mortgages will only allow monetary gifts to be used towards primary homes.

Down Payment Gifts Need to Be Well-Documented

The money that you give as a down payment contribution needs to be documented. Usually, mortgage lenders will provide a letter for both you and the individual you’re gifting to sign, which shows that the money was actually a gift and not a loan that will need to be paid back.

Lenders will typically ask for bank statements from those who are planning to use a monetary gift towards their purchase in order to comply with the Patriot Act. They want to know that the funds aren’t going to be used for any nefarious reasons, like money laundering or funding for any terrorist activity.

The rules will vary from one lender to the next, so you’d be well-advised to find out exactly what your beneficiary’s specific lender requires from the both of you.

The Bottom Line

The gift-giving season may have just passed, but the spirit of generosity doesn’t have to. If your loved one is having a tough time coming up with the necessary funds to put towards a down payment, helping them out is a noble gesture. Just make sure you’re aware of the rules that come along with offering gift money for a down payment to avoid headaches and pesky tax implications.

In a sellers’ market, unloading your home might be pretty seamless. But in a buyers’ market where the competition is stiff, you’ve got to get a little creative to make your home stand out from the rest.

In the case of the latter, offering incentives can be a great way to get buyers to notice your home. Here are a few ideas to help sweeten the deal and get prospective buyers to pounce on your property.

Offer a Home Repair Credit

Unless your home is brand-spanking new, there are most likely certain issues that might need to be addressed, no matter how small. Maybe you’ve got a couple of loose door hinges, or a chipped tile on the bathroom floor. Whatever the case may be, you can offer the buyers a credit to be used to rectify any minor issues that they might be less than satisfied with.

Don’t handle the repairs yourself, unless the buyers specifically ask you to before the deal closes. If you do, you’re just opening the door for any potential complaints from the buyers if they’re dissatisfied with your work. Offering a credit towards repairs gives buyers the cash they need to spend how they wish, and frees you from the responsibility of making sure they’re happy with the results.

Throw in Some of Your Home’s Goodies

Furnishing a home from top to bottom can be ridiculously expensive, not to mention time-consuming. Throwing in your home’s furniture and decor can help make the deal that much better in the eyes of the buyers (if they like your taste, of course). Offering furnishings, window treatments and accessories is especially beneficial if they’ve been custom made to fit your specific home.

Not only will this save the buyers money and hassle in outfitting the home after you’ve vacated, it’ll also help you avoid having to deal with the furniture yourself. If there are certain items in the home that the buyers absolutely fall in love with, consider leaving them there for them.

‘Buy Down’ the Interest Rate

The rate that buyers are offered by the banks at the time of mortgage application might not necessarily be the same come closing time. And many times these introductory rates are short-lived, which means the buyers might very well end up with a higher rate when all is said and done.

Many buyers choose to pay an upfront fee in order to lock in at a lower mortgage rate, which is known as “buying down” the interest rate. But rather than the buyers covering this cost, sellers can flip the bill instead to make the deal more attractive.

Let’s say the bank offers the buyers 3.5 percent today for a 30-year fixed mortgage. The buyers can pay the bank one percent to go towards the principle to get a lower rate, like 3.0 percent. A lower interest rate translates into lower monthly mortgage payments, which can really shave a good chunk of change off the interest payments made over the mortgage term. Offer to buy down the rate for the buyers, and you just might have a deal.

Offer Monetary Compensation For a Quick Closing

The longer you hang onto your home, the more money you’ll be dishing out to carry it. From the mortgage payments, to the utility bills, to the property taxes, carrying a home comes with hefty costs. And if you’ve already closed on a new home, that means you’ll be carrying two homes at the same time for a while until your current home closes.

Even if you bridge your mortgage, it’s still money out of your pocket. If this is a situation you want to avoid, consider offering the buyers a monetary credit for closing at your convenience. The expense associated with this type of incentive is typically a lot lower than the losses you might experience if the sale of your home takes forever.

Cover the Buyers’ Closing Costs

Once a buyer accepts a specific purchase price, the expenses don’t end there. In fact, closing costs can run into the thousands of dollars. But the last thing you want is for the buyers to get cold feet while the sale is in escrow once they start crunching numbers and discover how much it’s really going to cost them out of pocket to cover these expenses.

To help get the deal closed, consider chipping in for some of the closing costs, such as title insurance, home inspection fees, property insurance, moving expenses, lawyer fees, and home warranties. A little can go a long way in helping the buyers out, and getting your home off the market.

As a seller, you can offer a number of incentives and put them out there as part of your overall marketing strategy. The incentives you choose to offer and how you promote them can work amazingly well at getting buyers to bring the offers to the table. If your home isn’t getting as much attention as you would have hoped when you initially put your home up for sale, pull an incentive or two out of your hat to inch the deal to the buzzer.

Looking for an amazing deal on a house? Then you’ve probably toyed with the idea of buying a foreclosure. These types of sales have long been praised as an excellent way for buyers and investors to snag a great deal on a property. But there are potential risks involved with this type of an arrangement. Be prepared for the ugly perils when it comes to buying a foreclosed property.   

1. Damage and Vandalism to the Home

You’ve got to keep in mind that homes that have gone into foreclosure were once owned by people who couldn’t afford to make regular payments anymore. Basically, they’ve had their homes taken away from them, which no doubt would leave anyone a little jaded. It’s not uncommon for homeowners who have lost their homes to foreclosure to vandalize the place before they finally vacate.

Whether they spray paint the walls or take a sledgehammer to the floors, damage happens. Many times the vandalism doesn’t start until after the homeowners have left, leaving the place open for criminal activity. No one’s there to watch the place, and ne’er do wells are always ready to strike when the opportunity arises. So be prepared to walk into some unpleasant environments when you consider buying a foreclosure.

2. Issues With the Actual Purchase

Sure, you might have to put up with a few physical issues with a foreclosed home, but it can still turn out to be a really good deal for you. If you’re willing to put up with certain issues and are able to fix them, you can really add some value to the property despite paying a discounted price. But there are other issues that you might have to face that have nothing to do with the physical property.

Instead, you might encounter problems with the actual purchase itself. Homes that have gone into foreclosure will likely now be owned by the bank, which means this is the entity you now have to deal with. Many times banks won’t use the purchase and sale contract from the local real estate board, nor will they necessarily follow standard procedures.

Instead, expect banks to follow their own path, and use their own contracts and processes in order to protect its interests. You’ll still wind up with the house, but the process itself could become really lengthy and cumbersome.

3. Problems With the Lender

Getting a mortgage for a traditionally purchased home can come with its own set of issues, so don’t expect the situation with a foreclosed home to be any different. In fact, expect more hurdles to jump over.

Lenders aren’t in the business of handing out cash to borrowers for a home they deem to be uninhabitable, or that is appraised a lot lower than what it was sold for. And since the home was likely vacant in the weeks or even months leading up to the sale, they’ll probably have no knowledge of any current problems with the place. That means there’s no seller disclosure statement, leaving you to have to uncover all there is to know about the home yourself.

4. Liens

Many municipalities have specific regulations when it comes to properly maintaining a foreclosed property, such as regularly cutting the lawn. If a bank owns the house, and doesn’t keep its end of the maintenance bargain, the municipality can put a lien on the property if it has to maintain the lawn itself instead.

A bunch of other liens could be found to be placed on the home from unpaid utilities, contractors, HOAs, and so on. If you put an offer on a foreclosure, make sure that all liens are investigated by a title officer and rectified before you take title on the property. 

5. Plumbing, Mechanical, and Electrical Problems

Busted-up drywall and ripped out carpeting is one thing, but issues with the major systems in a home is quite another. Some of the most catastrophic issues in foreclosed homes stem from faulty plumbing, mechanical, and electrical systems.

Broken plumbing pipes can wreak havoc on the components of a home, not to mention leave mold behind that will render a home unfit to live in. When it comes to duct work, you may be unpleasantly surprised to find an exorbitant amount of dust and debris, not to mention rodents and other unwelcome guests.

If humidity has been left around furnaces for a long period of time, the heat exchangers will likely corrode, requiring them to be replaced at a costly expense. Any shoddy electrical work is considered to be a potential fire hazard. And in cases like this, the whole house might need to be rewired. Not exactly a cheap endeavor.

The Bottom Line

There are definitely some awesome deals out there on foreclosed homes. It’s just a matter of wrapping your head around some of the potential obstacles and pitfalls, and being prepared to deal with them head on. One thing’s for sure – don’t let a super low listing price cloud your judgement and allow you to gloss over the basics that make a foreclosure purchase a good deal.

These days, you’ve got to up your game when it comes to marketing your property for sale.

Having a video of your home plastered on the internet offers buyers an instant up-close and personal look at your property that simple images and words just can’t offer. With a virtual walk-through of the home, buyers can more easily get a feel for the flow of the interior. And it can be accessed 24/7!

Using video and the internet to your advantage means you can connect with prospective buyers anytime and anywhere, and create some buzz around your listing.

Shoot Your Video With Professional Equipment and Expertise

Forget about recording your home tour with your iPhone – that’s just not going to cut it. You want to impress buyers, you’ve got to show them your home in the best light possible. That means you’re going to have to get your hands on a decent camera, and perhaps even use the expertise of a professional videographer.

Paying attention to detail and capturing your home in its best angles is essential to creating a high-quality property video. You need good lighting, clear audio, a well-spoken voice guiding the tour, solid editing, and appropriate background music to make it all come together. A good video will be sure to impress buyers, and entice them to learn more about the property.

Upload Your Video to YouTube

A video is 50 times more likely to show up on Page One of a Google search compared to simple text on a webpage. Good enough reason to incorporate video into your marketing scheme, right? While there are plenty of places that you could upload a video showcasing your property, YouTube is by far the best. After all, the video-sharing site has over 1 billion users a month, and over 50% of prospective homebuyers use YouTube as their main source for video research.

Even if your listing doesn’t reach top spot on the page, the thumbnails that Google randomly places beside the video results are more likely to attract the eye than simple text links. And by including rich keywords in the description of your video when uploading, you can help Google rank you highly, making it easier for buyers to find your property.

Include a Keyword-Rich Description

While the video itself is what’s going to speak to viewers, don’t miss out on the opportunity to use the content box below the video to provide a detailed description of the property. Use your words wisely, as you don’t want your viewers to have to go through an essay just to reach the end of your description. They won’t stick around long enough for that, so get to the point.

Be sure to include rich keywords in the description to help your video rank as high as possible on search engines. If people are using “detached homes in Orange County,” then use that phrase in your description (if it applies, of course). And include a link to your real estate agent’s website that’ll lead viewers to a more detailed listing of your property.

Promote Your Video on Social Media Sites

After you’ve got your video uploaded on YouTube and other sites, it’s time to promote it. And one of the best and easiest ways to do that is to toot your own horn on social media. Instead of posting a pic of what you’re eating for dinner or updating your status to vent about last night’s episode of Grey’s Anatomy, use these channels to promote your real estate listing video. Use Twitter, Facebook, Instagram, LinkedIn, or any other social media platform to get as may eyeballs on your listing as possible.

Include a Rider on Your ‘For Sale’ Sign With a Link to Your Video

You can easily get a lot of local attention by including a link to the video on a rider hanging off your For Sale sign. These days, everyone’s got a smartphone on them with photo and video capabilities. It takes a second to whip it out and snap a picture of the sign and its accompanying link to the video tour of the listing for them to refer to when they’re ready to type in the URL into their web browser.

There are plenty of marketing channels to employ to advertise your home for sale, and video is definitely among the more effective ones. Considering the possibilities and benefits of using video as a marketing tool, why not use it to show buyers what you’ve got to offer?