Pay attention to the details if you have an adjustable-rate mortgage. Many three-year ARMs are due to reset to higher rates over the next 18 months, and many homeowners aren't prepared.
ARMs are mortgage loans with payments based on indexes that adjust periodically. The amount due each month may go up several times over the life of the loan.Many people with ARMs still don't know when their ARMs reset, what the new rates will be or whether they face prepayment penalties, according to Allen Fishbein, director of housing and credit policy at the Consumer Federation of America. "We've been recommending for a long time that people pull out their mortgage-loan documents so that they really understand the terms," Mr. Fishbein said.
Richard Musci, vice president of Charles Schwab Bank, says mortgage lenders as a group don't make it easy for homeowners by flagging a reset. But now, "More of us will be reaching out to clients and saying, 'Hey, this event is coming up.'" Look at the timetable for resets and at what the new rates will be, and think hard about whether you can manage the payments, he added. Make sure you know if rates will reset more than once, too.
Now's the time to think it all through. Don't wait until the loan resets or even until a few months before that to start watching interest rates and thinking about refinancing, said Mr. Fishbein.
Time to Go 'Fixed'?
Staying with an ARM isn't the best route for everyone. As the recent credit crisis has revealed, many people who got ARMs in recent years weren't able to sustain the rate resets. They may have been able to make payments initially, but not once rates went higher. "For most people of average income, a fixed-rate mortgage makes sense," said Mr. Fishbein.
These loans give the peace of mind of monthly payments that are set, not escalating. The trade-off is that long-term financing typically costs more. So the homeowner may pay more to lock in a rate but the approach pays off if interest rates go higher. Caveat: The difference between ARMs and fixed-rate mortgages isn't always huge, so compare costs.
Adjustable-rate mortgages are still good for some people who don't plan to stay long in a house, or for high earners who are willing to trade off lower rates today with possibly higher rates in the future, according to Mr. Musci.
"There are plenty of people who knowingly went into ARMs for the right reasons," he said.
By Arden Dale From The Wall Street Journal Online
Thursday, November 29, 2007
Wednesday, November 28, 2007
What bubble? Places where housing is hot
Ten areas where job growth, weather help keep the market humming along.
Home prices nationwide posted their biggest drop in 16 years last month, according to the National Association of Realtors.
But someone forgot to tell the folks in Salt Lake City. There, the median home sale price jumped 21 percent in the second quarter this year, versus the same period last year.
It's not that Salt Lake City is entirely immune to the national housing downturn. In fact, new housing permits are down this year, and there is a glut of Macmansions, says John Taylor, investment specialist at Commerce CRG, a unit of developer Cushman & Wakefield. But with more people moving into the area, thanks in part to a percolating job market, demand for affordable existing homes is still healthy, while commercial construction is up 40 percent from last year. Apartment vacancy rates are less than 2 percent, and longtime residents worry about a land grab from commercial property investors flocking in from California and Las Vegas, "We are in the middle of a construction boom," says Taylor.
Salt Lake City isn't the only anomaly. Prices are rising in other parts of the Rocky Mountain states, parts of Texas, the Pacific Northwest and the Southeast. Other markets defying the national meltdown include Beaumont-Port Arthur, Texas, Salem, Ore., and Farmington, N.M.
What gives? For starters, these places missed the get-rich real-estate frenzy of recent years, says Lawrence Yun, economist for the National Association of Realtors. Prices aren't falling because they didn't rise that much to begin with. The median price of a single-family home in Sarasota, Fla., in June was $311,000. Compare that with $228,000 in Salem, which realized a 16.7 percent increase in property values in the second quarter of 2007, versus the same time frame in 2006.
Yun believes states like New Mexico and Utah are finally, albeit belatedly, enjoying the run-up in property prices that began in California and swept through Nevada in the last few years.
According to Taylor, Salt Lake City has typically been more affordable than many other parts of the nation, but as property prices fall in the rest of the country, the gap has closed. In the second quarter of 2007, the national median existing single-family home price was $223,800, down 1.5 percent from a year earlier. The median price in Salt Lake City, however, is now up to $233,100.
Percolating local job markets get some of the credit. (In fact, the more resilient property markets tend to be in places with above-average job growth.) Technology has been a driver in booming real estate markets like Spokane, Wash., and Salem. Sales and service sector jobs are revving up growth in Allentown, Pa.
Another factor: the sun. In a study predicting population growth through 2020, Wharton professors Albert Saiz and Peter Linneman name the I-85 corridor between Raleigh, N.C., and Atlanta as having the greatest potential for future growth because of its long stretches of good weather. Americans are increasingly prioritizing such quality of life factors in their decisions about where to live. And where the people go, the job markets now follow. Also on the list: New Mexico, Arizona, parts of Texas and Salt Lake City.
By Deborah Orr - Forbes
Home prices nationwide posted their biggest drop in 16 years last month, according to the National Association of Realtors.
But someone forgot to tell the folks in Salt Lake City. There, the median home sale price jumped 21 percent in the second quarter this year, versus the same period last year.
It's not that Salt Lake City is entirely immune to the national housing downturn. In fact, new housing permits are down this year, and there is a glut of Macmansions, says John Taylor, investment specialist at Commerce CRG, a unit of developer Cushman & Wakefield. But with more people moving into the area, thanks in part to a percolating job market, demand for affordable existing homes is still healthy, while commercial construction is up 40 percent from last year. Apartment vacancy rates are less than 2 percent, and longtime residents worry about a land grab from commercial property investors flocking in from California and Las Vegas, "We are in the middle of a construction boom," says Taylor.
Salt Lake City isn't the only anomaly. Prices are rising in other parts of the Rocky Mountain states, parts of Texas, the Pacific Northwest and the Southeast. Other markets defying the national meltdown include Beaumont-Port Arthur, Texas, Salem, Ore., and Farmington, N.M.
What gives? For starters, these places missed the get-rich real-estate frenzy of recent years, says Lawrence Yun, economist for the National Association of Realtors. Prices aren't falling because they didn't rise that much to begin with. The median price of a single-family home in Sarasota, Fla., in June was $311,000. Compare that with $228,000 in Salem, which realized a 16.7 percent increase in property values in the second quarter of 2007, versus the same time frame in 2006.
Yun believes states like New Mexico and Utah are finally, albeit belatedly, enjoying the run-up in property prices that began in California and swept through Nevada in the last few years.
According to Taylor, Salt Lake City has typically been more affordable than many other parts of the nation, but as property prices fall in the rest of the country, the gap has closed. In the second quarter of 2007, the national median existing single-family home price was $223,800, down 1.5 percent from a year earlier. The median price in Salt Lake City, however, is now up to $233,100.
Percolating local job markets get some of the credit. (In fact, the more resilient property markets tend to be in places with above-average job growth.) Technology has been a driver in booming real estate markets like Spokane, Wash., and Salem. Sales and service sector jobs are revving up growth in Allentown, Pa.
Another factor: the sun. In a study predicting population growth through 2020, Wharton professors Albert Saiz and Peter Linneman name the I-85 corridor between Raleigh, N.C., and Atlanta as having the greatest potential for future growth because of its long stretches of good weather. Americans are increasingly prioritizing such quality of life factors in their decisions about where to live. And where the people go, the job markets now follow. Also on the list: New Mexico, Arizona, parts of Texas and Salt Lake City.
By Deborah Orr - Forbes
Tuesday, November 27, 2007
Real estate rates fall overnight
30-year fixed rate at 5.82%; 10-year Treasury yield at 3.83%
Long-term mortgage interest rates were down Monday, and the benchmark 10-year Treasury bond yield dropped to 3.83 percent.
The 30-year fixed-rate average sank to 5.82 percent, and the 15-year fixed rate fell to 5.4 percent. The 1-year adjustable held at 5.53 percent.
The 30-year Treasury bond yield was down at 4.29 percent.
Rates and bonds are current as of 7:15 p.m. Eastern Standard Time.
Mortgage rate figures are according to Bankrate.com, which publishes nightly averages based on its survey of 4,000 banks in 50 states. Points on these mortgages range from zero to 3.5.
Source Inman News
Long-term mortgage interest rates were down Monday, and the benchmark 10-year Treasury bond yield dropped to 3.83 percent.
The 30-year fixed-rate average sank to 5.82 percent, and the 15-year fixed rate fell to 5.4 percent. The 1-year adjustable held at 5.53 percent.
The 30-year Treasury bond yield was down at 4.29 percent.
Rates and bonds are current as of 7:15 p.m. Eastern Standard Time.
Mortgage rate figures are according to Bankrate.com, which publishes nightly averages based on its survey of 4,000 banks in 50 states. Points on these mortgages range from zero to 3.5.
Source Inman News
Monday, November 26, 2007
Forbes.com Best And Worst U.S. Housing Markets
I want to share just the first portion of this article which came out on 11/21/07. It is written by Matt Woosley. "
Scaled-back lending practices, risky loans, oversupply and low demand continue to plague the nation's housing markets, driving down prices and stalling sales. But it's not so in Salt Lake City, and San Jose, Calif., where prices have continued to climb without so much as a hiccup.
In Salt Lake City, the median home sale price for the third quarter this year rose 14% over the same time in 2006, according to data released today by the National Association of Realtors (NAR). That's the biggest increase of the country's 50 largest metros measured. Prices in Charlotte, one of the country's most undervalued markets, surged 11%. In San Jose, they jumped 9.4%. "
You can read the full article here.
If you have any questions, please call me. Now is the time to buy a home!
Scaled-back lending practices, risky loans, oversupply and low demand continue to plague the nation's housing markets, driving down prices and stalling sales. But it's not so in Salt Lake City, and San Jose, Calif., where prices have continued to climb without so much as a hiccup.
In Salt Lake City, the median home sale price for the third quarter this year rose 14% over the same time in 2006, according to data released today by the National Association of Realtors (NAR). That's the biggest increase of the country's 50 largest metros measured. Prices in Charlotte, one of the country's most undervalued markets, surged 11%. In San Jose, they jumped 9.4%. "
You can read the full article here.
If you have any questions, please call me. Now is the time to buy a home!
Thursday, November 22, 2007
Why Home Ownership is the Smartest Way to Build Wealth
Many buyers are convinced that waiting will allow them to buy the property at a lower cost. This flawed thinking fails to consider the true costs of home ownership, not only in terms of tax consequences, but also in terms of wealth accumulation.
It's cheaper for me to rent!
How many times have you used/heard that objection?
Right now interest rates are so low that purchasing makes more sense. To illustrate this point, begin by using one of this online "rent versus buy" calculators, According to the U.S. government, the average rate of inflation for the last 10 years is 2.54 percent. Check your local census or multiple listing service data to determine how much properties in your area have appreciated over the last few years as well, or you can give us a call. Furthermore, the longer a person stays in the property, the more substantial the savings are. Here are two examples that illustrate why renting is not usually a smart idea:
Example 1: Assume that you currently pay $1,500 per month in rent and plan to purchase a $300,000 property with $30,000 down and a $270,000 loan for 30 years at 6.25 percent. You are in the 28 percent tax bracket and will own the property for eight years. Appreciation keeps pace with inflation at 2.54 percent per year. The estimated cost of renting is $142,016 versus the estimated cost of buying, which is $117,754.04. You will save $24,262 by purchasing rather than renting.
Example 2: You currently pay $2,000 per month in rent. You plan to purchase a $400,000 property with $40,000 down and a $360,000 loan at 6.25 percent. You are in the 28 percent tax bracket and will own the property for 10 years. The property will appreciate at 5 percent per year. During the 10-year period, the estimated cost of renting is $241,189 as compared to the estimated cost of buying (due to appreciation and equity build up), which is $68,905. You will save $172,284 by buying rather than renting.
What if the prices go down?
Laurence Yun, the chief economist for the National Association of Realtors, shared the following facts at NAR's mid-year conference:
From 1995 to 2004, the average renter accumulated $4,000 of wealth. In contrast, the average homeowner accumulated $184,400. (See his presentation on "Marketing to Gen Next" slide 47 on Realtor.org.) To account for the difference of $180,400 of wealth accumulation, a $300,000 house would have to decline by 60 percent.
What many people fail to consider is that homeowners accumulate wealth by paying down their mortgage, even if their house does not increase in value. Renters lose additional wealth as their rental payments increase over time, whereas a homeowner with a fixed-rate loan has locked in his or her mortgage amount for the next 30 years.
If you would like to see how I can help you in your home buying needs, please give me a call.
It's cheaper for me to rent!
How many times have you used/heard that objection?
Right now interest rates are so low that purchasing makes more sense. To illustrate this point, begin by using one of this online "rent versus buy" calculators, According to the U.S. government, the average rate of inflation for the last 10 years is 2.54 percent. Check your local census or multiple listing service data to determine how much properties in your area have appreciated over the last few years as well, or you can give us a call. Furthermore, the longer a person stays in the property, the more substantial the savings are. Here are two examples that illustrate why renting is not usually a smart idea:
Example 1: Assume that you currently pay $1,500 per month in rent and plan to purchase a $300,000 property with $30,000 down and a $270,000 loan for 30 years at 6.25 percent. You are in the 28 percent tax bracket and will own the property for eight years. Appreciation keeps pace with inflation at 2.54 percent per year. The estimated cost of renting is $142,016 versus the estimated cost of buying, which is $117,754.04. You will save $24,262 by purchasing rather than renting.
Example 2: You currently pay $2,000 per month in rent. You plan to purchase a $400,000 property with $40,000 down and a $360,000 loan at 6.25 percent. You are in the 28 percent tax bracket and will own the property for 10 years. The property will appreciate at 5 percent per year. During the 10-year period, the estimated cost of renting is $241,189 as compared to the estimated cost of buying (due to appreciation and equity build up), which is $68,905. You will save $172,284 by buying rather than renting.
What if the prices go down?
Laurence Yun, the chief economist for the National Association of Realtors, shared the following facts at NAR's mid-year conference:
From 1995 to 2004, the average renter accumulated $4,000 of wealth. In contrast, the average homeowner accumulated $184,400. (See his presentation on "Marketing to Gen Next" slide 47 on Realtor.org.) To account for the difference of $180,400 of wealth accumulation, a $300,000 house would have to decline by 60 percent.
What many people fail to consider is that homeowners accumulate wealth by paying down their mortgage, even if their house does not increase in value. Renters lose additional wealth as their rental payments increase over time, whereas a homeowner with a fixed-rate loan has locked in his or her mortgage amount for the next 30 years.
If you would like to see how I can help you in your home buying needs, please give me a call.
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