Great new tools make Zillow a hit!

Back in July 2006 I wrote “To Zillow or Not To Zillow” as my first blog entry. Since then, Zillow has added many features which make it a pretty good web site to go for home buying and selling information.

The first new feature that helps with the accuracy of the Home Value Estimates, which Zillow calls “Zestimates,” is now the owner of the property can log in and make any changes necessary to give a better value. For instance, when I look at my home address, Zillow says that I have 1.5 baths and does not list the number of bedrooms in the home. The Zestimate I get from Zillow seems very low. When I go in and correct the number of bathrooms from 1.5 to 2.0 bathrooms, and enter 4 bedrooms, the value of the home is much closer to what I would have expected. Again, Zillow is using mostly public records data which can be inaccurate and incomplete. But, it still can be a good starting point to look for approximate values in a neighborhood.

The next features all deal with selling your home. If you are planning to sell your home without the use of a Realtor, you can list your home for sale. You can list your sales price and all of the features and amenities of your home as well as all of your contact information and any upcoming open houses you may have scheduled. You can even pick comparable properties in your neighborhood to show the value of your home.

If you are a Realtor, you can have a profile on Zillow and advertise all of your listings – for free! Just another tool to let potential home buyers and sellers get to know you and another avenue to get exposure for your listings. There are several other cool tools for Realtors such as a Real Estate Guide where you can contribute and share your expertise with the people who visit Zillow.

They will also allow professionals within the real estate field (e.g. Realtors, loan officers, home inspectors, attorney, etc.) create EZ Ads to advertise their services. It is a very cheap way to get your name out (only $0.01 per showing) and you can target specific zip codes and you are in complete control of how much you spend on these ads. I have just completed my first EZ Ad so I do not know if it is at all effective, yet. But, in the future I will let everyone know my experience.

The last feature I am going to talk about is the “Make me Move” listings. Let’s say you like where you live, the house is fine, you get along with the neighbors, etc. You aren’t actively looking to move but, if someone offered you the right price, you’d be out the door. That is what this tool is for. You set the price that would make you want to leave your property. You don’t have to deal with all of the hassles of actively marketing your home or having a Realtor do it for you but, if there is a buyer that would love to buy your home, he can contact you and make an offer.

Again, the Zestimates offered on Zillow are still dependant upon the information contained in the public records and, therefore, you need to be careful when relying on these estimates. But, they are moving in the right direction. And, the cool new tools make it a great site to check out when looking to buy or sell a home.

Interest-Only Mortgages - Are they for you?

Over the past few years, interest-only mortgages have become much more popular. An interest-only mortgage is one where the required monthly payment only covers the interest payment on the loan. With a traditional mortgage, part of the required payment is for interest and part of the payment is to reduce the principal amount of the loan – called amortization. With an interest-only loan, the loan amount will not go down (amortize) unless the borrower chooses to pay additional money with their payments.

Usually, the mortgage requires interest-only payments for a set period of time – 5 or 10 years. Then, the loan converts to a fully-amortizing loan over the remainder of the term of the loan.

There are many reasons that people may opt for an interest only loan. Many borrowers may need the lower, interest-only payments to be able to afford the home they want. This can be a good option for those borrowers who anticipate an increase in their income in the near future. They are able to afford the home they want now and, when the loan converts to a fully-amortizing loan, their income has increased so they can cover the higher payment.

Another reason for an interest-only loan is cash flow. Many real estate investors will use an interest-only loan in order to maximize the cash flow they receive from their rents. With a lower interest-only payment, the investors will have more money to work with each month.

Many people also choose this option so they have more money left over to pay down higher-interest debt such as credit cards and auto loans or to invest in hopes of earning a higher rate of return than the interest rate on their mortgage.

Some people feel that interest-only loans are dangerous. And, they can be. But so can any mortgage program if the borrower is not fully educated on the features, benefits, and possible problems with a loan program. There are several benefits to this program which were listed above. But, borrowers must understand that, if they do not make more than the interest-only payment, the balance of their mortgage will remain the same. When home values are rapidly increasing this is usually not a problem. But, if home values remain flat or decline, borrowers may find themselves with little to no equity in their properties.

If you’re interested in an interest-only loan, make sure your loan officer takes the time to fully explain this program and make sure you are comfortable with all the facets of the program before you sign.

---