Buy Your Home Today: Understanding Why It’s a Bad Idea to Try and Time the Mortgage Market

Buy Your Home Today: Understanding Why It's a Bad Idea to Try and Time the Mortgage MarketIt’s often the case that people will opt to postpone home ownership until the best rates are available or it’s a more stable investment, but in an ever-shifting market it may not be the best decision to put such a sizeable investment off. If you’re wondering whether or not you should put off investing in a home, here are some reasons you may want to start putting your time into searching for a home.

Interest Rates Always Fluctuate

While interest rates are constantly changing and have certainly risen since the economic recession of 2008, they still remain relatively low and this can make investing in a home an even better financial decision. There are no certainties that market rates will remain low, but given a lower monthly payment and the easier qualifications nowadays to acquire a loan, the present may be the best time to start investing in your own place.

Investing Early Reaps Financial Rewards

It’s easy enough to wait for a lower home price or even improved interest rates, but there is no guarantee that the market will shift down. In the meantime, you may be spending at lot of your monthly paychecks on rent. If home ownership is one of your goals in life and you’re living month to month with a high rental payment, investing money into a home is a sure way to gaining equity for the future, even in the event that the market shifts up.

It’s A Good Time To Buy

When it comes to the market, there may always be a time coming when you’ll get a better deal, but the fact remains that homes tend to remain on the market a lot longer these days and it’s largely a buyer’s market. There are no guarantees that you’ll be able to find the house you want at the price you can afford, but there are a lot of good deals to be found these days and investing sooner is an opportunity to reap financial rewards down the road.

Many people hold off on home ownership because they are waiting for prices to come down or interest rates to change, but the sooner you invest in a home, the more you can benefit from investing into something that is entirely your own. If you’re currently perusing the market for a home at a price you can afford, contact your local mortgage professional for more information.

What’s Ahead For Mortgage Rates This Week – October 24, 2016

Last week’s economic releases included the National Association of Home Builders’ Housing Market Index along with reports on housing starts, building permits and sales of previously owned homes. Weekly reports on new jobless claims and mortgage rates were also released.

NAHB: Builder Sentiment Dips amid High Demand for Homes

Home builder confidence in current housing market conditions dipped from September’s index reading of 65 to 63. September’s reading was the highest since the peak of the housing bubble. Any reading above 50 indicates a majority of builders surveyed are confident about housing market conditions. Building new homes is essential to relieving intense demand for homes against short supplies of homes for sale. Builders cited obstacles including low supplies of land for development and workforce shortages, but expressed confidence in overall economic conditions that affect construction and sales of new homes.

Housing Starts Fall, Building Permits Rise

According to the Commerce Department, the reading for housing starts was nine percent lower in September than for August. 1.047 million starts were reported in September on a seasonally adjusted annual basis; August’s reading showed 1.150 million starts. Monthly readings tend to fluctuate due to weather, labor and materials supplies. Single family starts provided good news with a higher annual rate of 783,000 starts; this was 8.10 percent higher than August’s reading.

More building permits were issued in September than for August. Overall, 1.225 million permits issued on an annual basis. August’s reading showed 1.152 million permits issued. Building permits for single-family homes rose to 783, 000 on an annual basis, an increase of 8.10 percent over August. September’s increase in single-family permits indicates that builders are shifting their efforts toward single-family construction instead of multi-family construction. This signifies confidence in homeownership and suggests stronger housing markets as renters become homebuyers.

Sales of PreviouslyOwned Homes Increase

The National Association of Realtors® reported that previously owned homes sold at a seasonally-adjusted annual pace of 5.47 million sales in September as compared to a rate of 5.33 million sales in August. Pre-owned home sales rebounded after slowing in July and August. Home prices rose 5.60 percent year-over-year to an average of $234,200; this was the 55th consecutive month that home prices rose.

Sales of pre-owned home sales rose in all four regions rose year-over-year from 0.90 percent in the South to 5.80 percent in the Northeast. First-time buyers accounted for 34 percent of sales, which was the highest participation rate in four years.

Mortgage Rates Higher

Freddie Mac reported higher average mortgage rates last week. 30-year fixed rates were five basis points higher at 3.52 percent. 15-year fixed rates were three basis points higher at 2.79 percent. 5/1 adjustable mortgage rates rose three basis points to 2.85 percent. Discount points rose from 0.50 to 0.60 percent for fixed rate mortgages and were unchanged at -.40 percent for 5/1 adjustable rate mortgages.

New jobless claims were higher than expected at 260,000 claims; analysts expected 248,000 new claims to be filed based on the prior week’s reading of 247,000 new claims filed. Last week’s reading was the highest in six weeks, but analysts said that layoffs remain very low.

Whats Ahead

This week’s scheduled economic news includes Case-Shiller home price data, readings on new and pending home sales along with reports on consumer confidence. Mortgage rates and new jobless claims will be released on their regular weekly scheduled.

Did You Know?: How You Arrange Your Furniture Can Turn Off Potential Buyers. Here’s Why

Did You Know?: How You Arrange Your Furniture Can Turn Off Potential Buyers. Here's WhyMost sellers focus on finding the right furniture to stage their home, but they never consider how the placement of that furniture can undo all their hard work. It’s a subconscious thing, but the arrangement of items in the home can really make a difference with buyers.

Be sure to not make some of these common mistakes when arranging furniture to sell a house.

Keep The Traffic Flowing

A proper furniture layout should serve to guide the flow of traffic from room to room and make it easy to move freely. When furniture is placed without foot traffic in mind it can lead to blocked pathways and dead ends when potential buyers are looking around.

Rooms that are overcrowded with furniture have the opposite problem and supply no easy way for guests to move without stepping over each other. Make sure traffic can flow freely through the rooms and there is plenty of space to walk around.

Decide On A Focal Point

Every room needs a focal point for the furniture. Most rooms use built in features like a fireplace, but when the home doesn’t have anything built in a television or painting will serve the same purpose.

Without a focal point, the room will feel disjointed and confused. This leads to chairs or couches pointed in different directions and can make potential buyers feel uncomfortable. A key focal point also takes the focus away from any flaws in the home.

First Impressions Over Function

Sometimes people can become so comfortable in their own home that function will overrule aesthetics and furniture will be placed where it proves the most useful and not where it looks the best.

This is fine until it’s time to sell and the first thing buyers see when they enter a room is furniture in places where it doesn’t look the most appealing. Walking in and seeing the back of furniture is never a good look, so make sure everything looks the best from the place guests will enter the room.

Every home has a different floor plan and it can be difficult determining whether furniture is placed properly, especially when you are used to the way it is now. A local real estate agent can walk through the home and give great insight into what improvements can be made and provide an outsider view of how the home looks to new visitors.

Buying a Home? Make Sure Your Finances Are in Order First

Below is a guest blog post by Janet Elliot of RE/MAX

Purchasing a new home is part of the American Dream, just as much as graduating high school and college, getting married, and having children. It’s also the hardest part of the dream to achieve; you need patience, resilience, thick skin, and great financial planning.

The latter is the most important aspect of buying a home. With that said, you don’t need loads of money in order to purchase – just decent credit and a solid financial plan. So, before you head out to the local open houses, be sure you’ve first tackled your finances in order to know which homes you can actually afford.

Make Sure You Have the Credit

According to Keith Gumbinger, Vice President of HSH, a mortgage information company, the best mortgage rates are given to potential buyers who have a credit score of 740 or above. However, you can still get a home loan with a credit score of 620; in some cases even a 580 credit score can qualify you for an FHA loan.

Just because you may qualify for a loan at 580, it doesn’t mean that you should apply for one. Lenders use your score to determine whether or not they will lend to you, but also at what rate. Lower credit scores mean higher rates.

The best thing you can do to get your credit score on track before purchasing a home is to get a free credit report from six to twelve months before you go house hunting. This report looks at the three main credit bureaus, giving you insight into your number, and what needs to be taken care of to improve the score.

Doing this up to a year before you start looking allows you plenty of time to increase your score. Mortgage companies aren’t the only ones that look at this number; sellers and real estate agents also look as this number, and it can determine if they will sell to you or take you on as a client. Don’t overlook this step, it’s essential to your success.

Do You Have Too Much Debt?

Your debt is another huge factor when attempting to secure a lender. In fact, it can at times be even more important than your credit score; it’s the first thing they look at when determining your eligibility. The debts they look at include student loans, car loans, credit card payments, and so forth. Ideally, lenders are looking to see if your overall debt plus your potential new mortgage payment is 45% or less than your income.

For example, if your monthly pretax income is $5,000, they want to see that $2,250 or less of it is going toward your mortgage payment and debt. Obviously, the less debt you have, the better. If you can reduce your overall debt by paying off that pesky car loan or student loan, your payment-to-income ratio will decrease and make you a more attractive buyer. In addition, leave older credit lines open, avoid opening new credit lines, stop buying on existing credit, and don’t shuffle your money around; this will leave you in the best position to buy a home.

Set a Budget and Prepare for Your Down Payment

Now that you have your debt and credit score goals where you want them, it’s time to look at your budget and prepare for your down payment. The best way to determine your budget is by using the standard rule when it comes to purchasing a new home. The rule of thumb is to only look at homes that are no more than 2.5 times your gross annual salary. In layman’s terms, if your annual salary is $50,000, look for homes priced no more than $125,000 dollars.

Once you have your max amount, it’s time to speak to lenders to see what your financing options are. You typically will have the choice between two types of mortgages: fixed-rate and adjustable-rate. Fixed-rate mortgages are where your monthly payment and interest rate stay the same the entire time you have the loan, for between 15 to 30 years.

Adjustable-rate mortgages have an introductory interest rate that will change after a specific period of time. Simply put, it could start off at a particular rate for the first two years, but can begin being adjusted annually after that. In general, most real estate agents would suggest that a fixed-rate mortgage payment is the safer financial choice, but every homeowner is different.

Aside from determining your budget and settling on a loan option, you will also need to plan for a down payment. In the best case scenario, you want to have a down payment of 20 percent of the total price of the home, but a minimum of 10 percent down can work for a conventional mortgage loan. Since everyone’s situation is different, some buyers simply cannot come up with that type of down payment.

If you are among those who cannot afford a higher down payment, you can apply for an FHA loan, which can make your down payment as little as 3.5 percent of the cost of the home.

In some cases, if you meet the income limitations of your state, you can even get a five percent down payment loan from traditional loans. Work with your real estate agent and speak with a few lenders to find which style of mortgage and down payment method will be best for your situation.

One Last Thing Before You Make an Offer

Closing costs are another thing to think about before you put in an offer. It used to be you could get some credits for your closing costs and still have your offer accepted, but not so much anymore. To be prepared in the current market, be sure you have at minimum 2.5 percent of the purchase price for closing costs (not including your down payment). This will give you the best chance of putting in a successful offer.

The real estate market is competitive right now, with many sellers taking multiple offers of the asking price and choosing the most solid one. Rise above the competition with closing costs already accounted for. By following these steps, you will be in the perfect position to put in an offer on your dream home. Now it’s time for the fun stuff – heading out to open houses!

janetelliotJanet Elliott has served as a Realtor with REMAX for 28 years in the metro Atlanta area. Janet is also a Certified Residential Specialist or CRS. This is a designation achieved by less than 1% of real estate agents. When not practicing real estate, Janet can be found spending time with family and friends out on the water!

NAHB Housing Market Index Dips 2 Points

According to the National Association of Home Builders, overall builder confidence in housing markets dropped two points in October to an index reading of 63. September’s reading of 65 was the highest posted since the housing bubble peak. Component readings for October’s housing market index were mixed; the reading for builder confidence in market conditions over the next six months rose one point to 72. Builder confidence in current housing market conditions fell two points to 69. Builder outlook for buyer traffic in new home developments over the next six months fell by one point to an index reading of 46.

Approaching winter weather likely contributed to lower readings, but builder confidence remained strong. Any reading above 50 signifies that more builders are confident about specific index components than fewer. While home builders continue to be encouraged by low mortgage rates and a stronger job market, they also face obstacles including shortages of labor and buildable lots for development.

High Demand, Low Inventory of Homes Present Ongoing Challenges

High demand for homes coupled with depleted inventory of available homes is sidelining some buyers. As demand continues to drive home prices higher first-time and moderate income buyers are faced with affordability and mortgage qualification challenges. Limited inventory also makes it difficult for home buyers to find homes they want and contributes to competition for available homes. Buyers depending on mortgage financing typically compete with investors and cash buyers for homes in high demand areas.

Real estate pros and analysts monitor home builder sentiment as an indicator of future home supplies, but builder sentiment and housing starts don’t necessarily correspond. Given high home prices and strict mortgage qualification standards that sideline some buyers, it appears that home builders are taking a moderate stance toward ramping up construction.

In addition to boosting real estate markets, building homes provides jobs and supports local economies. Building homes creates demand for construction materials and related products and services.

The Major Keys to Understanding When It’s Time to Refinance Your Mortgage

The Major Keys to Understanding When It's Time to Refinance Your MortgageAs a homeowner, you may have heard the term re-financing without being aware of exactly what it means, but there are a lot of pros and cons associated with what it can do for your financial situation. While getting a different new loan for your mortgage can be a good financial decision in certain situations, here are some things you should consider before you decide that this is the right choice for you.

Getting A Lower Rate

One of the main reasons that re-financing can be a popular option for many homeowners is that it can provide the opportunity for considerable money savings. Since you will be acquiring a new loan with a lower interest rate, this will be an opportunity to reduce your monthly payments, increase your equity at a faster rate and invest the extra funds into something else. While a lower rate can definitely mean money savings, it’s important to consult with a mortgage professional so you’re aware of any associated fees and can make a decision that will be financially beneficial.

Consolidating Your Debt

It is often the case that people will choose to refinance their mortgage with a lower-interest rate in the hopes of paying off the debt they’ve accumulated, but with the cost of refinancing this is not necessarily the best financial decision. While consolidating debt can be great if you go into it with a budget that you plan on sticking too, if you’re leaning too much on the idea of a lower interest rate meaning instant savings, it may be a good idea to take a look at the numbers.

Investing In Your Home

For many people, re-financing their mortgage is a good opportunity to renovate their home and increase its value. However, while renovating your home can be a good idea for resale, there are many home renovations that will not necessarily increase the value of your home and make up for the amount you’ve invested. If you’re making forward-thinking renovations, refinancing is one thing, but ensure you’ve seriously considered what will add value.

There can be a number of financial benefits when it comes to refinancing your mortgage, but it’s important to work out your tentative budget and crunch the numbers before you make a final decision. If you’re currently looking into re-financing your home and are curious about what it entails, contact us at Mason-McDuffie Mortgage for more information.

What’s Ahead For Mortgage Rates This Week – October 17, 2016

Last week’s economic news included reports on job openings, retail sales and weekly readings on average mortgage rates and new jobless claims.

Job openings were lower in August after hitting an all-time high in July according to the federal government. Job openings fell to 5.44 million in August as compared to July’s reading of 5.83 million job openings, Job openings reached 5.31 million in August of 2015. Job quits were unchanged in August with a reading of 3.0 million quits; the quits rate was 2.20 percent. There were 5.4 million hires in August as compared to 5.8 million hires in July. The hiring rate held steady at 3.60 percent.

Weekly jobless held steady from the prior week’s reading of 246,000 new claims, although analysts expected a reading of 252,000 new claims. September retail sales increased by 0.60 percent in September and fell short of expectations of 0.70 percent growth. August’s retail sales reading was negative at -0.20 percent. Retail sales excluding the automotive sector were as expected with an increase of 0.50 percent.

Mortgage Rates Rise, Consumer Sentiment Slips

Freddie Mac reported higher rates for fixed rate mortgages. The rate for a 30-year fixed rate mortgage rose five basis points to 3.47 percent. The average rate for a 15-year mortgage was four basis points higher at 2.76 percent. The average rate for a 5/1 adjustable rate mortgage was unchanged at 2.84 percent. Discount points averaged 0.50 percent for fixed rate mortgages and 0.40 percent for 5/1 adjustable rate mortgages.

Consumer sentiment was lower in October with an index reading of 87.90 percent. Analysts expected a reading of 91.70 percent based on September’s reading of 91.20 percent. November’s presidential election was viewed by analysts as unsettling to consumers’ feelings about current and expected economic conditions. The index reading for consumer sentiment for current economic conditions rose from 104.20 percent in September to 105.50 in October, but fell sharply for expected economic conditions to an index reading of 76.60. Analysts noted that consumers with lower incomes expressed less assurance about post-election economic conditions.

Whats Ahead

This week’s scheduled economic reports include the NAHB/Wells Fargo Home Builders Market Index, Sales of Pre-Owned Homes and Commerce Department readings on housing starts and building permits issued. In addition to weekly readings on mortgage rates and new jobless claims, reports on consumer spending will also be released.