Dec

27

Mortgage Rates: Oh My Goodness…What Are You Waiting For?

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Got Mortgage Rates?
If you watched TV news, you’d think banks have no money to lend. Ridiculous! I have officially concluded that television is our greatest enemy. I believe this whole-heartedly. I cannot tell you how much I am sick of hearing people on the news saying, “…the sky is falling…”. Over and over again, it’s a constant mantra. And that’s just a comment I catch just when I’m flicking through channels. I don’t actually watch much television and when I do, if I pass Fox, CNN, ABC, CBS, etc. - I find myself catching a news anchor saying how horrible things are.
Well let me tell you something…interest rates are hovering around 5% for a 30 year fixed mortgage. Of course, that’s a rate for a prime buyer with fico scores over 630 and good income and low debts. But wait just a minute - 630 credit score? Last I checked, that wasn’t all that stellar - but it can get you a good rate.
Now I must qualify that statement with this: The mortgage market is changing every month. My business associate, Tony Auffant of Continental Home Loans, is constantly updating me on the changes to the mortgage market.
Due to these changes, it can be amazing what is available one month and gone the next. Like a 5% interest rate! The following is an excerpt from an article I wrote in April about the effect of mortgage rates on your monthly interest paid:
If you buy a house for say $440,000 now and put 20% down, with a $350,000 mortgage now, at a fixed percentage rate of 6%, 30 year mortgage, the total amount of payments over the 30 years would be $755,431.84 with the total amount of interest paid being $405,431.84.

If you buy this same house say, 10 months from now (when the market prices “hit bottom”) for $410,000 and put 20% down, with a $328,000, at a fixed percentage rate of 8%, 30 year mortgage, the total amount of payments over the 30 years would be….$866,426.55 with the total amount of interest paid being $538,426.55.

We’re talking over $100,000 more in costs just to “save” 8 to 10 percent now on a purchase price. It clearly doesn’t add up. Even if you say you’re not going to live their for 30 years and will most likely sell the home 5 to 7 years from now, the cost to you will be more if you wait and take the chance of interest rates being higher.

Now you can adjust those numbers but they remain the same. The difference between 5% and 6.5% means you’re paying approximately 23% more in interest (the difference between 5% and 6.5% is not just 1.5% - it’s a 23.077% difference).
So now I basically am saying to you, as a buyer, you’re just simply nuts not to seriously consider buying real estate now. I have written in the past that interest rates would be higher now. And I can admit, I was wrong, but no one saw what happened in October to the entire financial market. Not even Warren Buffet himself saw that coming.
So I’m not going to say that interest rates will be higher 3 months from now. What I will say is that I know the following facts:
1. Interest rates for qualified buyers are incredible…right now.
2. Prices have dropped over 20%.

This may not be enough for you, as a buyer. To you I say - continue paying rent and see how much you increase your net worth over the next year and call me when you’re ready to buy or sign up for a listingbook account now and browse the market like a champ. To the buyer who’s shaking his head in curiousity and is saying, “I think it’s time to buy”…Call me 631-831-9048.

(c) Copyright 2008, www.tommcgiveron.com

By Thomas McGiveron, Licensed Salesperson

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Oct

28

How Do You Buy A Home?

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In working with first-time homebuyers, there’s one clear question that needs a simple answer. How do you buy a home? That’s the question. The purchase of real estate is unlike any other purchase because it is a major financial transaction. One that should not be taken lightly (as many are finding out now after the sub-prime lending frenzy).

So how do you buy a home?

I’m going to share with you in this article, the very basic plan on how you buy a home. It is up to the reader to do their own due-diligence and learn more about the topic on their own - or by calling me.


As a first-time buyer, in one of the best buyers markets in decades, first and foremost, it is in your best interest, to find a good agent. Before I got my real estate license, I was an actual human being just like you, the reader (attempt at humor there). I believed that I, and I alone, would be best suited to “find a deal“.

After obtaining my license and working with many buyers, I have come to find that working with a qualified professional is definitely better than going it alone, thinking you’re “all that and a bag of chips”. Of course you have to find the right agent. That’s a personal preference, but they have to use cutting-edge tools and be available 24/7.

Now a good real estate agent will have the partners in the business and encourage you to either use their services or your own professional contacts in the mortgage/banking industry to determine your mortgage approval status. Determining how much you can afford and understanding the mortgage process is a great place to start.

Once you have established a basic knowledge for how much you can afford, it’s important to understand what you like, as a buyer. This may take a few visits to some open houses as you do some preliminary work to lay the foundation for your search. Knowing what you like and do not like is definitely advantageous to square away in the beginning. A worksheet that you take with you to view homes can help remind you of what you like and do not like. Second to this, allow the real estate agent you begin working with to guide your search a little. See what they come up with. If they can’t demonstrate an understanding of what it is you’re looking for, or they can’t (or don’t) talk to you about the realities of the market conditions and advise you about your price range, then it may be time to move on.

When you come to the point of making an offer, the basics of what to expect are simple. Once a price is agreed to, you will more than likely, have a home inspection completed. The home inspection is used specifically to determine if there are any major problems with the home. It is not a tool to renegotiate the tentative agreed upon price and terms.

From this point, the seller’s attorney will generate contracts and send them to your attorney. From this point, legalities will be discussed and as soon as both parties have agreed to contract stipulations and terms, the contracts will be signed. As the buyer, you will provide your attorney with the down payment, in the form of a check (make sure you have the money in the bank)!

Items such as an appraisal of the homes value, which will be used to establish an approval for the loan amount for your lender and verify to you and to all parties, that the home is valued accordingly.

Your attorney will order a title search, which will verify all information pertaining to liens on the property. You don’t want to buy a home with outstanding liens on it for obvious reasons.

You will then choose a home insurance carrier and have a policy in place to protect the home upon taking possession of the property. Your lender will require all of these items to be in place prior to closing.

The real estate closing will be scheduled according to each parties availability, most importantly, the buyers, sellers and their respective attorneys as well as the bank and title company. The real estate agent(s) will rearrange their schedule to match the closing date and their availability has no bearing on the closing whatsoever.

These are the basic to buying a home. If you have any questions on this topic, please feel free to call me at 631.831.9048 or leave a comment.

(c) Copyright, 2008 www.tommcgiveron.com

By Thomas McGiveron, Licensed Real Estate Salesperson


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Oct

28

Client Testimonial: Kevin M.

Filed Under Buyers, Sellers, Sellers & Buyers | Leave a Comment

I just wanted to thank you both for everything. It’s a rough market out there right now and I appreciate everything you guys have done and what you have to go through in these types of transactions. Thanks for your efforts in helping us, especially in regards to your hard work, your excellent availability and tenacity in a tough market. I will certainly recommend you to anyone I know in the area if they go looking to sell (or buy for that matter).

Kevin M. - 10/17/08

Thank you Kevin for those kind words. My partner, Paul Musso, and I helped sell Kevin’s home in West Babylon. It was a great house to market, as it was always ready to show. When we first began the listing, I thought it would be a fast sale, quick and easy. This market proved otherwise. We managed to still sell it in 78 days, but I first thought we would sell it within the first 30 days because it was a great house, a cut above the rest in the area. Through our efforts of aggressively following up with other agents and buyers, we managed to sell it and help Kevin and his family move on. Congratulations and good luck!

Oct

16

STAR Program For New York State

Filed Under Buyers, Sellers, Sellers & Buyers, Taxing Matters | Leave a Comment

The STAR program for New York state is one of those elements of Long Island real estate that talked about alot, but understood very little. Most people refer to the STAR program as a simple real estate property tax decrease. STAR is an acronym for School Tax Relief.

The STAR program application is completed by homeowners one time and provides an exemption from school taxes for non-owner occupied, primary residents. The deadline for filing is generally March 1st of each year, however it is best to check with your local tax assessor.

A great resource for information on the STAR program is http://www.orps.state.ny.us/star/index.cfm.


Sep

23

Recent Economic Events Affecting The Mortgage Industry

Filed Under Buyers, Mortgage Matters, Sellers, Sellers & Buyers | Leave a Comment

Recent economic events affecting the mortgage industry.

The Fed announced plans to create a market place for illiquid mortgage debt. This should do a lot of long-term good to help the housing and lending environment. As if that weren’t enough, the Securities and Exchange Commission also placed a temporary ban on the short selling of 799 different financially related stocks.

What prompted these dramatic actions? Very dramatic happenings earlier in the week.

After 158 years in existence, Lehman Brothers filed for bankruptcy last Monday due to overexposure of high risk loans in the mortgage arena. Then, the Fed gave insurance giant AIG an $85 Billion lifeline to keep it from going into bankruptcy, after initially stating it would not intervene. Then it was announced that Merrill Lynch is being acquired by Bank of America, which will save them from the same fate as Lehman Brothers, and now troubled bank Washington Mutual is looking for a buyer as well.

Also playing a role was the fact…

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Sep

21

Long Island Real Estate Market: Moving Forward

Filed Under Buyers, Sellers, Sellers & Buyers | Leave a Comment

In my previous article, Long Island Real Estate Market: It’s Starting To Look Ugly, I struggled with that title for the simple reason, it just sounds aweful. So I wanted to make the next article a bit more positive in tone.

The content of the previous article is filled with facts about declining prices. I wrote it not to discourage homeowners, but to warn them of what lies ahead. While we have a long way to go before prices settle and the Long Island real estate market begins an upward tend, there are many national statistics indicating an end to the market decline.

Now these statistics are positive. However (I’m beginning not to like this word very much), these improvements in the marketplace are lagging behind the negative impacts on our financial markets and housing supply vs. demand ratios.

My hesitancy to jump for joy in my articles is simply because I do not want to give the wrong impression to homeowners wanting to sell. It’s imperative that homes are priced aggressively. One of the mistakes people make in listening to the news is they hear terms like, “improvements in sales” and translate that to, “improvements in sale prices”. And that is not the case. We may have sold more homes throughout the Long Island real estate market within the last month or so, but that does not mean, prices improved. It means several other things like, prices dropped to a point where buyers paid the respective price(s), mortgage rates dropped, gasoline prices dropped, and real estate agents marketed their properties harder than ever before.

This paragraph above is key for homeowners to understand. So please, read it again so that you build an understanding of the business of real estate and how the market works.

In closing, I’d like to leave you with some positive quotes from some pretty respectable names in the news. Hopefully they will help us in our attempts to continue moving forward.