Oct

28

Will The 30 Year Mortgage Disappear?

The federal government is reconsidering their involvement in the home mortgage process. They plan to still ‘guarantee’ certain mortgages. However, they appear to be redefining what they consider a ‘qualified purchaser’. They are discussing stricter lending guidelines in four different areas:

The type of mortgage
The minimum down payment
The debt ratios of the buyer
The FICO score of the purchaser

Today, I want to look at #1.

It appears that there is at least conversation about eliminating the 30 year fixed rate mortgage which has been a staple in this country’s housing industry for some time. Some in government want to duplicate the mortgage process of other countries. In Canada, for example, they don’t even have 30 year fix rate mortgages available. The vast majority of Canadian home loans have a 25 year payout but the interest rate is renegotiated every five years. If rates go down, you will wind up with a lower rate. If rates go up, you end up paying a higher rate. If you want a fixed rate mortgage for 25 years you pay a rate approximately two percentage points higher than the going rate at the time of your closing.

Would the same happen in this country? Last week, Housing Wire quoted Janis Bowdler, senior policy analyst at the National Council of La Raza:

“Without some form of Fannie Mae and Freddie Mac, replacements to support these popular loans, many first time borrowers will be shut out.

“Without that guarantee lenders would not offer 30-year fixed-rate mortgages, at least not at rates the average person could afford. Yes, some would be available but not for the average family but for those with a large amount of inherited wealth they can put to a large down payment.”

Why Is This Important?

You probably want to set your housing expense at the lowest number possible for the longest time possible. This may be the appropriate time to lock-in your long term housing expense as three things seem possible, if not likely, in the future:

Mortgage rates will increase from current historic lows
The 30 year fixed rate mortgage may disappear
Rents will return to historic norms of 3% annual increases

Long Island Real Estate Market | Promote Your Page Too

Share

For Email Marketing you can trust

Oct

21

2 Things You Need To Know About Low Mortgage Rates

Filed Under Buyers | Comments Off

With the low mortgage rates (as of today – 4.18%…wow), there’s multiple things that anyone who’s thinking of buying, should really give some serious consideration.

Let’s take for instance, the difference in buying power between a 4% mortgage rate and a 6% mortgage rate.

Mortgage Rate Differences

The first thing to notice is that the higher the mortgage amount is, the more money is saved on a monthly basis. For instance, the monthly savings between a 4% mortgage rate and a 6% mortgage rate at $200,000 borrowed is $243.00 per month. The difference at $400,000 borrowed is $488.

In both instances though, you can see that the buying power of each is extremely advantageous. So please note, you can borrow more money and have the same payment, thus providing you a greater opportunity to: buy a home with that extra bedroom, or that finished basement or that in-ground pool, etc.

The second thing to notice is the savings. Over a 30 year mortgage, borrowing $200,000, the savings at 4% keeps $87,480 in your pocket. One word is all I have to describe this and it’s, “Wow”.

Would you like to save that amount of money?

Or lose it, when rates go up (and they will sooner or later)?

Long Island Real Estate Market | Promote Your Page Too

Share

For Email Marketing you can trust

Oct

20

5 Things WSJ and Forbes Say About Buying Real Estate

Filed Under Buyers | Comments Off

We believe very strongly that now is the time to buy a home. Some will say we are just saying this to create real estate transactions and commissions. Because of that, today we will quote what those outside the real estate profession are saying to the people who look to them for financial advice.

The Wall Street Journal

Last week, in an article entitled It’s Time to Buy That House, the WSJ told their subscribers:

“It’s an excellent time to buy a house, either to live in for the long term or for investment income…Houses aren’t the magic wealth creators they were made out to be during the bubble. But when prices are low, loans are cheap and plump investment yields are scarce, buyers should jump.”

In an article two weeks ago, MarketWatch.com (the on-line blog for WSJ) told their readers:

“Now could be the best time in history to buy a home.”

Forbes.com

In a report to their subscribers, Capital Economics reported that:

“The previous declines in house prices and the more recent drop in mortgage rates to record lows have created an unusual situation in which the median monthly mortgage payment is more or less the same as the median rental payment.”

Why is this important? Last week, Forbes explained to their readers:

“If rents simply kept up with inflation at a 3.2% annual increase, a $1,500 rent payment would cost that renter nearly $900,000 over the next 30 years. The same $1,500 payment made to their mortgage would be only $540,000 (because the payments don’t increase with inflation).”

They went on to explain the advantages of homeownership during retirement:

“Even with a dismal 1% growth rate over 30 years, a $300,000 property would appreciate well over $100,000 giving the homeowner an additional nest egg for retirement…

At a time when retirement is becoming much more challenging, an extra $400,000 (or likely more) can make a major difference not to mention the impact of NOT having to pay a mortgage. How much less would you have to save for retirement if you didn’t pay the mortgage?”

Bottom Line

When the iconic financial newspaper and the iconic financial magazine say that it now makes financial sense to purchase a house, perhaps it’s time to buy a home.

Long Island Real Estate Market | Promote Your Page Too

Share

For Email Marketing you can trust

Oct

19

Important Question to Ask Yourself About Buying a Home

Filed Under Buyers | Comments Off

If you are in the market to buy a home of your own, you need to ask yourself one question: WHY?

It seems like a simple enough question yet it is not. Experts are predicting that, in many markets, prices will continue to soften. That has caused many buyers to stay on the fence of indecision hoping to buy at the optimum time. If the reason you are buying is to do a quick ‘flip’ of the property to make money, waiting most definitely makes sense.

What if the reason you are moving isn’t about finances however. Does it still make sense to delay? That depends on why you are buying. What if your purchase is more about improving the quality of life for you and your family? Or moving into a school district where your child’s talents will be maximized? Or being closer to friends and family? There is a cost to delaying any of these decisions.

We realize everyone wants to make a sound financial decision no matter the actual reason for moving. Delaying in a hope to ‘time’ the market might not make sense however. Forbes.com addressed this issue in an article by John E. Girouard last week:

“Trying to time the housing bottom is as much folly as trying to time stocks or any other investment vehicle. In fact, it’s greater folly because if housing prices do fall further, it’s likely to be because mortgage rates are rising, which would mean that over the long term that slightly lower price you may have paid could end up costing more in carrying costs than you saved.”

He went on to say:

“My answer to those who ask whether now’s the time to buy a house is that the American Dream is and always was alive and well. It has nothing to do with the direction of housing prices but everything to do with your financial situation, income stability, ability to shoulder the costs, and if the home you have your eye on is your version of the American Dream—a home you love that you hope to live in for an extended period.”

Bottom Line

Don’t make buying a home solely a financial decision. Is the real reason you want your own home more important than money? Only you know the answer.

Long Island Real Estate Market | Promote Your Page Too

Share

For Email Marketing you can trust

Oct

18

1 Important Thing Your Agent Should Be Doing To Sell Your Home

Filed Under Sellers | Comments Off

This market is all about fear. As a successful real estate agent, I’ve realized over the last few years, that one of the most critical things I have to do as a professional real estate salesperson, is use my “sales skills” to fight the fear in the market.

What are “sales skills”?
It is a common misunderstanding that sales skills are deceiving in nature and that is true in some cases (as people will try and “sell someone” on a product or service). However, sales skills have everything to do with knowing the product and knowing how to market the product. Just because an agent has their 75 hours of training and a license, does not mean they have developed sales skills.

Fighting Fear
Without a doubt, the greatest obstacle to getting a home sold in this market begins with the fear in the market place. So it’s important, as an agent, to develop a marketing strategy that helps create a sense of urgency for buyers to overcome their fears and actually buy. I specialize in analyzing each of my homes for sale and I look for angles which present opportunity to market any kind of information which helps the home sell. Creating urgency, or the fear of loss, in a prospective buyer or their agent, takes skill.

For instance, I currently have a few homes for sale that if they are not sold, the owners are going to remove the homes from the market and rent them. Now a basic agent would take that knowledge and do nothing with it. They would continue to have the listing remain on MLS or run some poorly-worded advertisement (and waste their money and the owners time and patience).

However, being a highly-trained professional salesperson, I use this information and contact all agents and buyers with any interest in the homes I have, and I tell them via email and phone, that the owners will pull their home for sale and rent it and I give the prospective buyer or agent, an actual date this will occur.

The result is, the reaction and subsequent offers I receive relatively quickly in response of me, having information and knowing what to do with it. Whereas, many other agents wouldn’t do anything, because they don’t know any better.

Bottom Line
This market requires Realtors(R) to think outside of the box and work – hard. If your agent isn’t making personal calls to other agents and following up on every single prospective buyer opportunity, then he or she doesn’t require the sales skills necessary to sell real estate in this tough market.

Long Island Real Estate Market | Promote Your Page Too

Share

For Email Marketing you can trust

keep looking »

Oct

28

Will The 30 Year Mortgage Disappear?

Oct

21

2 Things You Need To Know About Low Mortgage Rates

Oct

20

5 Things WSJ and Forbes Say About Buying Real Estate

Oct

19

Important Question to Ask Yourself About Buying a Home

Oct

18

1 Important Thing Your Agent Should Be Doing To Sell Your Home

Buying A Home?

Selling A Home?

REAL ESTATE MARKET UPDATES

AVOID FORECLOSURE

Helpful Real Estate Books

Categories

Archives

Links

Admin

Search