Freddie Mac: Equity Matters (a Lot!)

According to a Merrill Lynch survey, over 80% of the people in this country believe that home ownership is still “an important part of the American Dream”. There are many financial and non-financial reasons people feel this way. One of the biggest reasons is because it helps build family wealth. Last week, Freddie Mac posted about the power of home equity. They explained: “In the simplest terms, equity is the difference between how much your home is worth and how much you owe on your mortgage. You build equity by paying down your mortgage over time and through your home s appreciation. In a nutshell, your money is working for you and contributing toward your financial future.” They went on to show an example where a person bought a home for $150,000 with a down payment of 10%, resulting in a loan amount of $135,000. The buyer secured a 30-year fixed-rate mortgage at 4.5% with a monthly mortgage payment of $684.03 (not including taxes and insurance). They then illustrated what
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Cost Across Time

Some Highlights: With interest rates still around 4% now is a great time to look back at where rates have been over the last 40 years. Rates are projected to go up a full percentage point by this time next year according to Freddie Mac. The impact your interest rate makes on your monthly mortgage cost is significant! Lock in a low rate now while you can!
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Home Sales Will Remain Hot This Summer

People always talk about the “spring buying season” when they talk real estate. However, this year it appears as though the summer real estate market will be just as hot. The most recent Foot Traffic Report released by the National Association of Realtors (NAR) revealed that there are more buyers out looking at homes right now than at any other time in the last two years including the past two springs (in orange below). The Foot Traffic Report is compiled from data on the number of properties shown by Realtors. NAR further explains: “Foot traffic has a strong correlation with future contracts and home sales, so it can be viewed as a peek ahead at sales trends two to three months into the future. We can see that the number of prospective purchasers out looking at homes has been greater each month this year compared to the same month in 2014. And, though foot traffic fell off last June as compared to May, this year it has increased nicely. Bottom Line The housing market will remai
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DIY Guide for CMA

When selling your home, knowing the value is a very important factor to consider. There are many tools that agents and appraisers utilize to determine the value of a home. These two types of professionals often have different views and processes to determine the value of a home. An agent checks the value of a home by using a CMA or comparative market analysis while an appraiser will check your home personally, inspecting the structure, foundation and physical condition. Experts says that there is a do it yourself way to determine the real value of your home, to enable you to save the money you would be paying the appraiser and/or agent: Find and check the current homes sold in your neighborhood.  Agents and appraisers also begin by reviewing what has been sold for the last six months in your area. If there are no home sold in your neighborhood, expand the search area by a mile.  Next, make use of an online cma generator, available through most real estate firms, to provide you with
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Common Home Buying Goals

Housing prices have been decreasing for the last decade, making home buying still one of the greatest investments made by most Americans. Many articles have been published that suggest waiting to buy a home until a later date does not make sense today.  Home buying is not an easy task and requires a lot of effort, time and money. That is why it is critical to know your goals before you begin the home buying process. Here are some of the common goals: You are buying a home because you want more space and to give your family a comfortable living. You are buying a home because you desire and dream to own. You are buying a home because you want to be closer to your job. You are buying a home because you want a better neighborhood. You are buying a home because you can afford it now because of the low interest rates and home prices. When buying a home you must be certain that you will stay in that home for more than 10 years and ensure you will be happy with your purchase in order to avoi
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Benefits of Refinancing

Refinancing is the process of getting a new mortgage that may ease the burden many homeowners face.  By refinancing you may be able to reduce and or lower your monthly payments and interest. Refinancing may be a good idea for someone who has having a hard time paying their monthly mortgage payment. With refinancing you will have a lot of benefits. You can change the type of loan, the term and may receive some money from the existing home equity. Here are some benefits of refinancing: You will have savings on your monthly mortgage payment. You will lock in a lower interest rate. You will have the benefits of consolidating your home loans. You will be out in the debt in the future. Call Homes for Sale in Arlington TX if you need help with your finances. We can provide you experienced lenders that will help you with your refinancing, offer you benefits and other options for home refinancing.
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Real Estate Agents’ Key Advice Before Remodelling Your Home

When selling a home, one of the biggest steps to take is remodelling. Often sellers will add upgrades and repair some issues of the home because they believe it will add value to the home. This process does not work everytime as most sellers are having a hard time recouping the costs. Real estate agents suggest that it is best to contact them before starting to remodel and making upgrades and repairs. One of the top suggestions real estate agents tell home sellers is to be cautious when taking advice from remodeling and design firms, especially if you are considering selling your home in the near future. These firms are often not concerned with the selling potential of your home. It is often good to check if your re-modelling plan over than your neighbor. Remember that even if you are top of line, your home will sell faster.  It is important to consider you may price your home out of the price range of many buyers if your home upgrades and re-modelling is over their budget. Call Home
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Proper Pricing of Your Home

Thinking of selling your home? Then you must price it right. When selling a home, pricing it right is one of the most important factors that needs to be taken seriously and done correctly. There are many tips and tools offered online to know the value of your home and by that identifying its listing price. One of the common mistakes home sellers make is overpricing and overvaluing their home since they own it and know how much they have invested in it. Here is the correct way to price your home: Evaluate your home for sale. It is best that you hire a professional to fully inspect the condition of your home, to know the needed repairs and learn the actual value of your home. Use some of home value calculation tools offered by many real estate firms. Ask your agent for a CMA (comparable market analysis). A CMA is very useful for you to know the prices of the homes sold recently in the same neighborhood you are selling. Consider the season when you are selling your home. The supply and d
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1st Time Buyers Finally Crashing the Real Estate Party

There has been much conversation regarding the lack of first time home buyers in today’s real estate market. However, three recent reports seem to suggest that they are now entering the market in increasing numbers. The most recent Existing Home Sales Report from the National Association of Realtors(NAR) reported that: “The percent share of first-time buyers rose to 32 percent in May, up from 30 percent in April and matching the highest share since September 2012. A year ago, first-time buyers represented 27 percent of all buyers.” And, in a recent Washington Post article, Ken Harney revealed that: “According to a June 19 Campbell/Inside Mortgage Finance tracking survey, which polls 2,000 real estate agents nationwide, first-time buyers accounted for nearly 39 percent of home purchases in May; that’s the highest level since August 2010.” Also, according to American Enterprise Institute s International Center on Housing Risk’s May First-Time Buyer Mortgage Risk Index (FBM
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Debunking Some Myths about Mortgage Availability

There seems to be a growing chasm between what the public believes to be needed and what is actually needed to qualify for a residential home loan. A recent survey by Ipsos reported that: Two-thirds of those surveyed believe they need a very good credit score to buy a home, with 45 percent thinking a “good credit score” is over 780. Consumers overestimate the down payment funds needed to qualify for a home loan, with 36 percent thinking a 20 percent down payment is always required. However, according to American Enterprise Institute s International Center on Housing Risk’s May First-Time Buyer Mortgage Risk Index (FBMRI), reality is far from perception. The report reveals: 70% of first-time buyer mortgages had a combined loan-to-value ratio of 95% or higher About 20% of first-time buyers taking out mortgages had a FICO score below 660 25% had total debt-to-income ratios above 43 percent The median first-time buyer with an agency mortgage made a down payment of only 3 percent, or
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What is a Housing Bubble? Is One Forming?

The recent talk of Greece and its financial challenges has some questioning whether the U.S. could also return to the crisis we experienced in 2008. Some are looking at the rise in real estate values and wondering whether we are in the middle of another housing price bubble. What actually is a price bubble? Here is the definition according to Jack M. Guttentag, Professor of Finance Emeritus at the Wharton School of the University of Pennsylvania: “A price bubble is a rise in price based on the expectation that the price will rise. Sooner or later something happens to erode confidence in continued price increases, at which point the bubble bursts and prices drop. What makes it a price bubble is that the cause of the price increase is an expectation that the price will increase, which sooner or later must reverse itself.” Does Professor Guttentag believe we are in another housing bubble? In a recent article, he explained: “My view is that we are a long way from another house price
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The Impact of Rising Prices on Home Appraisals

The fact that residential home prices are increasing substantially in most regions of the country is music to the ears of homeowners. However, if you are in the process of selling your home, make sure you realize the major challenge a hot real estate market creates. Each house must be sold twice; once to a buyer and a second time to an appraiser who represents the bank that will grant the purchaser a mortgage to buy the home (unless it is an “all cash” purchase). In a real market with escalating prices, the second sale may be the more difficult. And a recent survey by Quicken Loans reveals that the gap between what a homeowner believes is the value of their home compared to an appraiser is widening. This could lead to an increase in the percentage of real estate transactions being challenged by a ‘short’ appraisal (where the appraiser value is less than the contracted price of the home). Bottom Line Whether you are a buyer or a seller, you must be prepared for this possibility
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One More Time…You DO NOT Need 20% Down

A recent survey by Ipsos found that the American public is still somewhat confused about what is actually necessary to qualify for a home mortgage loan in today’s housing market. The study pointed out two major misconceptions that we want to address today. 1. Down Payment The survey revealed that consumers overestimate the down payment funds needed to qualify for a home loan. According to the report, 36% think a 20% down payment is always required. In actuality, there are many loans written with a down payment of 3% or less and the number has increased through the first quarter of the year as shown by the graph below: 2. FICO Scores The survey also reported that two-thirds of the respondents believe they need a very good credit score to buy a home, with 45 percent thinking a “good credit score” is over 780. In actuality, the average FICO scores of approved conventional and FHA mortgages are much lower: Bottom Line If you are a prospective purchaser who is ‘ready’ and ‘will
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Pending Home Sales Reach Highest Mark In 9 Years!

The National Association of Realtors (NAR) recently released their Pending Home Sales Index Report and revealed that it is at its highest level since April 2006. The Pending Home Sales Index is “a forward-looking indicator based on contract signings”. The higher the Pending Home Sales Index number, the more contracts have been signed by buyers that will soon translate to sales. Every region of the country has experienced year-over-year gains in pending sales as seen below: NAR’s Chief Economist, Lawrence Yun cites job creation as a major reason that the housing market has boomed this spring, going on to say, It s very encouraging to now see a broad based recovery with all four major regions showing solid gains from a year ago and new home sales also coming alive. Yun went on to caution that, Housing affordability remains a pressing issue with home-price growth increasing around four times the pace of wages. Without meaningful gains in new and existing supply, there s no question
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