Category: Interest Rate

6 Wills, Won’ts and Worries of 2013 Home Buyers…. great article – had to share…

When I read this – I just had to share….

 

6 Wills, Won’ts and Worries of 2013 Home Buyers

 

Trulia Article By Tara-Nicholle Nelson

If you’ve ever taken up running, you might know what it’s like to strap on your new shoes, head over to the track and take those first few strides, then feel a pain in your chest, heaviness in your feet and possibly, actually see stars. Maybe your last steps off the track were accompanied by the thought process: “Either I’m crazy, or runners are.”

Until you have talked to a legitimate, dyed in the wool runner and told them your story, explaining why you detest running with every iota of your being you won’t know the runner’s secret: everyone feels that way at first. It’s the normal physiological adjustment to the increased load you’re putting on your cardiovascular and musculoskeletal systems, this pain you felt when you took those first few steps.  It goes away in just a moment, if and only if you keep on running.

Sometimes, knowing that others react to a tough situation by feeling the same emotions, thinking the same thoughts, or doing the same things you do flat out helps you feel less crazy, panicked and out of control of your situation. It’s the concept behind support groups but, last I checked, there really isn’t such a thing as group therapy for home buyers. (Well, some would say that’s what Trulia Voices is for, but I digress.)

Today’s rapidly rising prices and generally volatile market does make things tough for buyers, so we thought we’d systematically explore – and then share – what’s going on inside the minds of the buyers on today’s market.  Hopefully, sellers will find some insights for marketing their properties, too.

Fresh off the presses, here are some of the insights and takeaways from our latest American Dream Survey, pinpointing the things today’s buyers worry about, will and won’t do in their quest to get their own corner of the American Dream: a home.

Worry:  Mortgage rates and prices will rise before I buy.  Trulia’s Economist Jed Kolko reports that “the top worry among all survey respondents who might buy a home someday is that mortgage rates will rise further before they buy (41%), followed by rising prices (37%).”  The worry is valid, given the fact that the market was depressed for so long and has a long recovery road ahead of it.  It’s compounded by the fact that buying a home has gone from something that used to take a month or two and now routinely takes 6 months, 9 months, a year or even longer!

Here’s the deal: you can’t stop prices from rising. And fixating on this particular fear poses the potential pitfall of  rushing to buy or making compromises that will turn out badly in the end.  Don’t dilly dally, if you’re ready and in the market, and don’t mess around making lowball offers with no chance of success.  But otherwise, don’t let this fear drive your buying and timing decisions.

Will:  Be aggressive. B. E. Aggressive. Economist Kolko explained, “among survey respondents who plan to buy a home someday, 2 in 3 (66%)  would use aggressive tactics such as bidding above asking, writing personal letters to the seller, or removing contingencies, to name a few.”  What buyers do and don’t do in the name of aggressively pursuing their dream homes (and, consequently, what sellers expect) is slightly different in every town.

Knowing that other buyers are facing down the same challenges you are and coming up with similar, aggressive solutions can help you feel a little less crazy about your thought processes and emotions and the desperate measures that come to mind when you hear how many others think “your” home is their dream home. And that puts you back in control of what can sometimes feel like an out-of-control situation. Reality check: you are 100% in the driver’s seat when it comes to how aggressive you want to be in your pursuit of any given home, and which specific tactics you leverage in the course of that pursuit.

Worry:  I won’t find a home I like.  Forty-three percent of people who plan to buy a home in the next 12 months expressed the concern that they might not be able to even find a property they like. Perhaps these people were just seriously persnickety, but I suspect there’s a bigger issue at play here.  All of us can find a home we like, but whether there’s anything we like enough to buy in our price range is a completely separate issue.

This worry, then, seems to be closely related to the fear of rising prices – buyers are rightfully fearful that home value increases will put their personal dream homes out of their price range. This is why it’s super important to:

  • be aggressive about seeing suitable properties as soon as they come onto the market
  • work with an agent whose offer pricing advice you trust
  • adjust your house hunt downward in price range if the market dynamics include lots of over-asking sales prices, and
  • not to let months and months go by while you make lowball offers or otherwise be slow to  come to the reality of what homes are actually selling for in your area.

The sooner you put yourself seriously in the game and make reality-based offers, the more likely you’ll be able to score a home you like in your price range.

Worry:  I will have to compete with other buyers for the home I like. Twenty-seven percent of those who plan to buy at some point in the future and 32% of those who plan to buy in the next year said they feared the prospect of facing a bidding war. This worry is well-grounded. In California, the average property receives four offers – but stories of dozens of offers abound. And it’s not just a West Coast phenomenon: buyers from coast to coast trade tales of getting outbid and having to throw in their firstborn child, lastborn puppy and most precious earthly possessions just to get into contract.

Truth is, market dynamics vary from town to town, and even neighborhood to neighborhood, but if you’re buying on today’s market or planning to buy anytime soon, bidding wars, multiple offers and over-asking sales prices are a reality you will probably have to factor into your house hunt.

Won’t:  Bid way more than asking.  Only 9 percent of wanna-be buyers said they would bid between 6 and 10 percent over the asking price for a property. This finding surfaces the uber-importance of checking in with an experienced local agent to get a briefing on precisely how much over asking homes are selling for in your area.  This empowers you to tweak your online house hunting price range low enough that you can make an over-asking offer and be successful without breaking the bank.  And once you’ve gotten a reality-based estimate of the over-asking norm, it will loom less ominously in your mind’s eye as a potential American Dream-killer.

Worry:  I won’t qualify for a mortgage.  Thirty percent of all people who identified themselves as planning to buy a home in the future said they were worried they might not be able to qualify for a home loan. (Interestingly, only 25 percent of buyers in hot markets like Oakland and Las Vegas expressed this concern – rapidly rising prices and knowing lots of other buyers are closing transactions in your town seems to ease this fear.)

Of all the worries on the list, this is the one over which a smart buyer has the most power. So exercise it! Work with a mortgage broker who was referred by friends, family members or an agent you trust.  And ideally, work with them months – even a year or more – before you plan to buy.  They can help you put an action plan in place around boosting your savings and credit score, and minimize your debt and credit dings, that you can work to minimize mortgage qualifying dramas when the time is right. They can also help give you a stronger sense of what you can afford vis-a-vis your income, to help you anticipate any challenges related to what sort of home your dollar will buy in your market.

ALL: What worries do you have about today’s market? Which steps are you willing to take in your quest to achieve the American Dream?

I read this article at:  http://www.trulia.com/blog/taranelson/2013/07/6_wills_won_ts_and_worries_of_2013_home_buyers?ecampaign=cnews20+and1308A&eurl=www.trulia.com%2Fblog%2Ftaranelson%2F2013%2F07%2F6_wills_won_ts_and_worries_of_2013_home_buyers

Got Questions? – The Caton Team is here to help.

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Thanks for reading – Sabrina

What Will Waiting to Buy a Home Cost You?

What Will Waiting to Buy a Home Cost You?  Great article from Realtor.com

At the end of June, mortgage rates for a 30-year fixed-rate mortgage jumped to 4.5 percent, up from 3.9 percent on June 1 — and a notable jump from the historically low 3.35 percent monthly average rate toward the end of 2012. However, while higher rates do mean an increase in monthly mortgage payments, experts are urging potential home buyers not to resign themselves to renting for the next few years just yet — it’s still a good time to buy a home.

These moderate increases in payments may still be manageable, particularly if buyers look at less expensive properties, or negotiate a lower price.

For example, the difference in monthly payments for a $200,000 home at 3.9 percent and one at 4.5 percent is just $70.03. If budgeted correctly, this could be a manageable expense.

Rick Allen, chief operating officer of Mortgage Marvel, is one expert who says now is still the time to buy a house. His platform records online mortgage loan applications, about a million transactions a year, which serves as a barometer for how well the housing market is doing. He says that refinances are down, as to be expected with a rate increase, but that “shouldn’t scare people off.”

“Relatively speaking, rates are still at or near historic lows,” says Allen. “A 4.5 percent mortgage is still an incredibly attractive rate at which to finance a home. From a real estate perspective, we’re not far off from recent lows, and we’re heading to improve real estate values. The combination of those two factors make this still a good time to buy.”

As the unemployment rate continues to decline, Allen says we’ll see more potential homeowners enter the market as well. Though Allen says “theoretically, rates could go through the roof or back down to the floor” but he personally believes we’ll see rates around 5 percent through the end of the year.

This is the early stage of the recovery of the housing market, and the rising interest rates encourage potential home buyers to be more decisive, and act quickly. As more homes are bought, supply decreases, so prices may rise even further. So if you’ve been thinking about buying a home, don’t lose your confidence, but it may be prudent to act quickly as rates continue to rise.

My 2 Cents

I couldn’t agree more – and I am NOT trying to fear monger.  The truth of the matter is – no one has control of the Real Estate market.  We as a collective influence the market by our actions or lack of – but it the end – the market will move at its own pace.  In our experience, those trying to figure it out or ‘play the game’ generally miss the boat of opportunity. 

Instead The Caton Team has our clients consider what their overall plan is, and generally having a home to live in is pretty high on their list.  So we tackle the market in the moment and do our best to achieve their goal of homeownership. 

I read this article at: http://www.realtor.com/news/what-will-waiting-to-buy-a-home-cost-you/?cid=EML301130

Got Questions? – The Caton Team is here to help.

Email Sabrina & Susan at:  Info@TheCatonTeam.com

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Please enjoy my personal journey through homeownership at:

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Thanks for reading – Sabrina

 

Where Are Interest Rates Headed?

One of my lenders, Melanie Flynn of First Priority Financial, sent us this newsletter that I just had to share.

Where Are Interest Rates Headed?

This isn’t easy to say, but it must be said – rates are NOT going back down (at least not significantly). Rates being quoted right now range from the 4.75% area to above 5%, based on lender, consumer profile (credit score, program, money down, etc), and the day. When I say “the day”, I’m not being flippant – there really is such nauseating volatility that we are seeing rates jump by as much as .25% in interest rate in a single day.

With the drastic and dramatic jump we’ve seen since May 3rd, consumers may have thrown the brakes on for looking at houses – waiting for rates to come back down. It is important that you remember I’m here to help you convince the consumer of two things:

1) Rates are NOT going back down into the 3’s, or probably much (if any) below 4.5%.
2) They must continue their search now before home prices continue to go up along with the higher rates, further eroding their buying power.

Interest Rates – when they rise – decreases a clients buying power.  I can see the graph from economic class now.  As Interest Rates Rise, the cost of buying rises – therefore the purchase price or the home will decrease for the buyer.

Got Questions? – The Caton Team is here to help.

Email Sabrina & Susan at:  Info@TheCatonTeam.com

Visit our Website at:   http://thecatonteam.com/

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Please enjoy my personal journey through homeownership at:

http://ajourneythroughhomeownership.wordpress.com

Thanks for reading – Sabrina

Are Home Prices Rising Too Fast?

Hello Readers!
Found this article and had to share it.  Why?  Because this is on all our minds.  My 2 cents are in italics.
  
When the real estate market hit bottom you could feel the thud.  Buyers were leery of buying afraid home prices would continue to fall and sellers wouldn’t sell if their life depended on it not wanting to take any kind of loss.  Thankfully those days are behind us.  What a difference 1 year makes….it is obvious the memo is out and buyers are ready to buy again.  However, sellers are not quite there yet.  It seems that the bulk of properties for sale since 2009 were pre and post foreclosures, overinundating the market with options.  Come 2012 and today, with sellers not quite ready to put their homes on the market inventory remains low in our area – thus pushing prices up.
No Realtor or client enjoys markets like this.  Multiple offers, over bidding, no contingencies – all this is back in force right now.  Ideally we would like to see a normal healthy market with normal growth.  But with so few homes for sales and pent up buyers jumping off the fence – it is amazing to see this change that has taken place in the real estate world.
Enjoy the article – and would love to hear YOUR thoughts too!
Are Home Prices Rising Too Fast?
Some housing analysts are concerned that the sudden rise in home prices could make homes more unaffordable again if the price increases outpace income growth, The Wall Street Journal reports.
Average housing costs for home buyers who took out a mortgage were around 22.5 percent of average incomes, according to John Burns Real Estate Consulting. That is down from 38.5 percent in 2006, the peak of the housing bubble. The historical average is about 33 percent.
But with home prices rising in many markets and, in some, rising at a faster pace than income levels, will more people soon be priced out of the market?
Housing analysts say that, for now at least, lower mortgage rates are offsetting the higher prices of homes.
Borrowers have seen their purchasing power rise by around 33 percent over the past four years due to the low interest rates, The Wall Street Journal reports. For example, a borrower can make a $1,000 monthly mortgage payment and qualify for a $222,000 mortgage at today’s low interest rates, compared to 2008 when they’d likely qualify for $165,000 when mortgage rates were around 6.1 percent — nearly double what they are today.
Borrowers are able to withstand home-price increases because of the low rates, not because household incomes are growing, The Wall Street Journal reports. If mortgage rates tick back up to the 6 percent or 8 percent range, homes may look overpriced relative to incomes, according to housing analysts.
By: DAILY REAL ESTATE NEWS
Source: “Why Rising Interest Rates Could Eventually Curb Price Gains,” The Wall Street Journal (April 10, 2013)
 
Got Questions? – The Caton Team is here to help.
Email Sabrina & Susan at:  Info@TheCatonTeam.com
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Please enjoy my personal journey through homeownership at:
Thanks for reading – Sabrina

Shopping for the Best Interest Rates

THE lowest interest rates in decades sound enticing enough, but they are often out of borrowers’ reach.

Mortgage lenders adjust their rates based on perceptions of risk, so unless you can show you’re a low-risk borrower, you are unlikely to qualify for a rate that matches those seen in all the advertisements or headlines.

The rates quoted by Freddie Mac and others are averages drawn from a variety of financial institutions, and lenders use varied approaches to set them. As its base line, for instance, the Brooklyn Cooperative Federal Credit Union uses rates posted on the Credit Union National Association Web site for New York, according to Daniel Alejandro González, the credit union’s director of lending. Others, like Chase Mortgage, use markers like Treasury yields and agency mortgage-backed securities issued by Fannie Mae.

Consumers who want to try for the lowest rates available need to consider these basic factors.

CREDIT SCORE The ideal borrower has a FICO score of 740 or higher, said Thasunda Brown Duckett, the senior vice president of Chase Mortgage’s East Region. “That puts you in the best place for pricing,” said Ms. Duckett, whose office is based in Manhattan. According to MyFICO.com, borrowers in New York with scores of 760 to 850 could qualify for an annual percentage rate of 3.95 percent on a $500,000 30-year fixed-rate mortgage, while those with scores of 620 to 639 qualify for 5.53 percent.

POINTS The lowest rates usually are decreased by paying a fee called a point, or 1 percent of the loan amount. “You need to buy points in order to get the best rates at many banks,” Mr. González said. In Freddie Mac’s weekly survey on mortgage rates, points have averaged 0.7 percent on loans in the last year. Points might make sense depending on your financial situation and how long you expect to stay in a home. So ask for a zero point quote, too, and compare.

PROPERTY TYPES If you’re buying a duplex or a four-unit building, your rate will almost certainly be higher. Condominiums may also have a rate premium, especially if they are newer or your down payment is below 25 percent. Lenders charge more if you are not planning to live in the home. Commercial properties like apartment buildings have the highest rates, as they are considered riskier, Mr. González said.

DOWN PAYMENT Ms. Duckett says that borrowers who put down at least 25 percent are more likely to obtain “attractive pricing” at Chase. Lenders offer different breaks on rates if equity is higher, so you should ask what is available.

LOAN LENGTH A lot depends on how long you plan to live in a home. If you’re likely to move in a few years, an adjustable-rate loan with a low interest rate fixed for, say, three to five years, and adjusted afterward, might work best. Also, rates on 15-year fixed-rate loans are lower than those on the 30-year — 0.77 percentage points, on average, last year, according to Freddie Mac. “Some people may not need a 30-year mortgage,” said Jed Kolko, the chief economist of Trulia, the real estate information Web site.

Borrowers may also be able to reduce their mortgage rate when they enter into a “lock-in” agreement with a lender.

“Lenders typically offer a lower rate for a shorter lock period,” Mr. Kolko said.

Lenders typically agree not to change an offered interest rate for 60 days, but borrowers confident of a quick closing may be willing to accept a 45-day rate guarantee, or even a 30-day lock, in exchange for a small discount, because the transaction’s speed helps the lender reduce its risk.

Borrowers must make sure, too, that they consider the entire cost of a home, looking carefully at monthly payment calculations. According to Mr. Kolko, about a third of homeownership costs are in addition to the mortgage — among them property taxes, insurance, maintenance and repairs.

Article Shared via California Association of Realtors Newsletter and the New York Times

Got Questions? – The Caton Team is here to help.  Email us at Info@TheCatonTeam.com or visit our website at:   http://thecatonteam.com/

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