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Posts tagged ‘Mortgage’

5 Reasons to SELL SELL SELL!

The KCM Group posted a great blog giving 5 reasons you should sell now.

If you are thinking about selling you are probably back and forth with the idea debating if now is the right time or not. Well let me tell you…IT IS!

Here are 5 great reasons to justify my feelings:

1.) This is when your house will get the most exposure 

The spring, and particularly the month of May, is when most buyers enter the real estate market. This surge of buyers dramatically increases the exposure for your house. The best chance of getting quality offers (perhaps even multiple offers) is RIGHT NOW!

2.) Foreclosures and short sales will increase in about 90 days

The good news is that the number of people paying their mortgage on time is increasing. This will lead to less distressed property sales later this year and throughout 2012. The not-so-good news is that there is still a large inventory of existing foreclosures and short sales that will still be coming to market.

As an example, LPS reported in their latest Mortgage Monitor that:

  • There are still twice as many loans going 90+ days delinquent as are starting foreclosure
  • There are almost three times the number of foreclosure starts as there are foreclosure sales
  • Distressed property inventory levels are almost 45 times the rate of monthly foreclosure sales 

This means that there is a backlog of properties which will start coming to the market in about 90 days as banks clear up their paperwork challenges. These properties sell at dramatic discounts. They will be your competition. Both Fannie Mae and Freddie Mac have recently discussed the magnitude of this challenge.

3.) Interest rates have risen over the last six months

Interest rates have stabilized recently. However, in the last six months, interest rates have climbed over 1/2%. Every time the rates increase 1/4%, approximately 250,000 buyers are eliminated from qualifying for a mortgage. In an environment of volatile rates, waiting could mean that there will be fewer buyers eligible to purchase your house. It also could mean that you will pay a higher rate on the next home you buy.

4.) Qualifying for a mortgage is about to get even more difficult

Besides increasing rates, there are other factors that will hinder a buyer’s ability to qualify for a mortgage as we move forward. Lending standards have been getting tighter over the last year. And as the government debates the new proposed guidelines (QRM), banks are gearing up for even more stringent standards.

Morgan Stanley recently stated:

“Recent developments in issues such as GSE reform, Dodd-Frank securitization rules, and foreclosure settlement issues suggest a tighter and more expensive environment for mortgage credit.” 

This may impact any potential purchaser for your property and may also impact your next purchase.

5.) It’s time to get on with your life 

Probably the most important reason to sell is so you can get on with your life. You placed your home on the market for a reason. Do not allow a less-than-stellar housing market prevent you from reaching your goals as an individual or as a family. Think about the reasons you decided to move in the first place. Are these reasons still important to you? If you have to take less than you were originally hoping to get for your house, your family has a question to ask each other: Is the dollar difference in sales price worth putting off our plans? Only you and your family know the answer to that question.

Did that give you enough to want to sell now? I believe the reasons above prove that selling now makes more sense than waiting. Contact me today and I will be more than happy to help you full understand your best option!

Cheryl

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5 Quick Real Estate Tips for April

1. Be Ready for the Pre-appointment Appointment
In order to best take advantage of the opportunities this year will bring, make sure you are ready to speak real estate at any moment. Whether it is at the food store, the movies, or at your child’s ball game, people are again talking about real estate. Be prepared to intelligently articulate answers to the questions that come up. Ensure this by being very mobile with your information (smart phones, iPads, or tablets).

2. Understand the Advantages of Owning Over Renting
We sell real estate for a living. We must be prepared to be an evangelist for homeownership. Know that owning is less expensive than renting in 72% of the country. Be able to explain all the financial benefits of owning a home and learn the non-financial reasons people buy a home.

3. Know That Today’s Mortgage Opportunities Will Never Exist Again
Today, a buyer can purchase a home with a 5% interest rate guaranteed for 30 years. These low rates will disappear as the economy improves. If the lending reform that many are calling for happens, there is a chance that the 30 year mortgage will also disappear. For more on this point, click here.

4. Realize the Wealthy Are Back in the Market
In 2010, sales of homes under $1 million were down 2.8% from the previous year. Yet, home sales of properties priced over $1 million were up 18.6%. That means that the people who best understand the principle “cost vs. price” best think now is the time to buy real estate.

5. Don’t Forget It’s Still About “Supply and Demand”
There will be a steady supply of buyers purchasing homes this spring. Houses will sell; many houses. Don’t allow this increase in demand to fool you or your homeowners. Home prices will not appreciate on increased demand alone. Price is determined by the ratio between supply and demand. Make sure you know the month’s supply of inventory available for each category of house you have listed. Only then can you give great counsel on pricing.

We Think We’re Going to Believe Grandpa

There are those currently debating the financial advantages of owning a home. Some are looking at studies and reporting that homeownership has never really been a great investment.

One of these people is Jack C. Francis, a former Federal Reserve economist and professor at Baruch College. He said in a recent CNBC article:

“For generations, parents and grandparents have been telling us that the way to get ahead was to buy a house and keep making payments with a fixed interest rate and after 20 or 30 years it would be way up in value and that was your nest egg in old age. You could either live in it rent free or sell it and use the proceeds to rent an apartment.”

The article goes on to explain the rest of Mr. Francis’ comment:  

That was good advice until 2006 when home prices collapsed, he says, and it “may become good advice 10 years from now, but right now it’s not.”

Mr. Francis bases his conclusions on a study he completed which covered the years 1978 through 2008. In his study it showed that home prices increased annually by 5.7% and that the S&P 500 increased by 10.8%. Based on this information, Mr. Francis gives the following advice:

To students who come to him for guidance on whether to buy or rent in the near term, however, Francis has one word of advice: wait. “I keep telling them this is not the time to buy,” he says.

Let’s take a closer look at this conclusion.

1. We have our own study.

Mr. Francis did a study over a thirty year period which did not include the last 3 years. If we look at the same categories since January 2000 (covering one of the worst decades in American real estate history), we find that home values GAINED 42% while the S&P LOST 4.7%. It all depends on which set of data you choose to use.

2. The proper comparison is rent vs. buy.

All of these comparisons claim that putting your money into a different investment vehicle other than real estate might make sense. What they are not taking into consideration is that the investor will still have a housing expense. They will still need money for shelter. They cannot just take their money for shelter and buy other assets with it. A person can’t live in their 401k or their IRA. This leads us to…

3. In most markets today, owning is LESS expensive than renting.

Trulia recently came out with their Rent vs. Buy Index. The report shows:

 that it is more affordable to buy than to rent a two-bedroom home in 72 percent of America’s 50 largest cities.

For more on this issue including a 50 city breakdown, click here.

4. Current mortgage opportunities may never be available again

The government has driven mortgage interest rates to all time lows. You can still get a 5% rate and guarantee it for 30 years. Both of these opportunities may soon disappear. Mortgage rates will increase as the economy improves and the Fed no longer feels pressure to keep rates low. The 30 year mortgage may soon be a thing of the past if suggested mortgage reforms come to be. You can lock in your housing expense for 30 years if you purchase. Renting is like having an adjustable rate loan with no cap that readjusts EVERY year. Which way do you think a landlord will readjust it?

For more on this, click here.

5. Most Americans see more to homeownership than financial value.

Last week, Fannie Mae released the National Housing Survey. The survey reported:

  • 96% of all homeowners said homeownership has been a positive experience.
  • 84% of Americans still believe that owning a home makes more sense than renting. Even 68% of renters believe owning makes more sense.
  • 2 in 3 Americans believe that lifestyle benefits of homeownership (65%) are superior to the financial benefits (32%).

Bottom Line

There are more and more studies being done on the value of homeownership. We think we will trust in what our parents and grandparents said. Your mortgage payment is money you put into your savings. Your rent payment goes into the garbage.