As stated in Weichert Insights this morning,

Rates on 30-year mortgages continue to fall and are now at the lowest point in five decades, according to Freddie Mac. Coupled with attractive prices, these incredibly low rates make buying a home more affordable now than at almost any point in history.

This is fantastic news for homebuyers and sellers. Buyers can take advantage of high home affordability and save tens of thousands of dollars over the lifespan of a 30-year loan by locking in at these never-before-seen rates.

As a seller, you should make sure your real estate agent displays information about your home’s “affordability” to show potential buyers how low the monthly cost of ownership is at this point in time.  This helps buyers see what buying your home really means to their bank account every month.  I put up rate sheets with the price of the home in every open house and often get raised eyebrows from guests about how they never realized that they could afford a home that price…but that with rates so low, they can!  I also leave them up in the home why a listing is on the market so that when agents bring in their clients, the client can really envision what buying this home actually looks like in the form of a monthly payment.  Sellers…these rates increase your pool of buyers!

Sellers need to take advantage of the rates as low as they are…they will not stay this low for long…you can could never borrow money for as cheaply as you can  now….this market is good for both sellers and buyers and that is not something that typically happens at the same time.

Ok…so I know what some of you are thinking, so I will address it:

I know that some sellers stand to lose money on their home regardless of the market being favorable due to when they purchased their home (in the peak of the market).  In this case, it may not be the right time to sell if you do not have to….but if you purchased prior to that wild inflated time period, you may also be looking at  selling and saying…”I have lost money because if I had sold in 2006 I would have made a lot more money”…FOLKS…while it is true that you would have “made more money” then, it is NOT necessarily true that you lost money.  You can’t lose money that you never had.  Those prices were not real…yes it would have been lucky to sell at that time, but chances are you would have purchased another higher priced home and then really would be in a position where you would lose money if you sold.

I could go on for days about why the market did what it did and why it needed to be corrected, but I think most people understand that now (plus I don’t want to bore you to tears).  The point is that it is still the American dream to own a home and now you can do that and borrow money very cheaply to make it happen.  For a buyer this means more house for less money.  For a seller this means more buyers.

Happy Monday everyone!

Hi!

Courtesy of our friends at Weichert Financial, here are some interest rate updates as of July 3, 2010:

Fannie Mae 30 Year Conforming Fixed Rate
4.375% with 1 point – 60 day lock

Fannie Mae 15 Year Conforming Fixed Rate
3.990% with 1 point – 60 day lock

Historic Lows!  Take advantage if you can.

On a side note: If you are eligable…VA Loans (not shown above) are very advantages now…in additon to being able to put down as low as 0%, if you put down as little as 10%, your funding fee decreases exponentially…this is a huge savings over paying PMI with a conventional or FHA loan and although the previous reputation of this type of loan is that it is “difficult”, it is now a fantastic option for veterans and is a very strong loan program when compared to a conventional loan putting down less than 20%.  It is much easier to obtain now and does not take as long to get approved as was once the case.  If you have any questions, feel free to reach out and I can set you up with a loan officer to discuss your options.

Of course people think that Real Estate Agents just want people to buy so they can make money, but I just want to share what is actually happening in real estate…and why right now really is a GREAT time to buy/or to “move up” if you are in a position to do so.  Additionally, if you are thinking of selling, it is a great time now as well in Northern Virginia (contrary to what the news is saying).  In Northern Virginia we actually have a shortage of inventory meaning buyers are competing over houses.  The buyers are out because of the great interest rates, so it is a great time to put your house on the market.  We currently only have about a 3 month supply of homes when a stable market calls for a 6 month supply.  Anything over 6 months is a buyers market.

Here is some great info from Weichert Insigts that I wanted to share.  It offers a great illustration of  what todays prices and interest rates actually mean to the cost of a home now vs. later.  This is great news for buyers AND sellers…that doesn’t happen often, so take advantage.  Enjoy!

Waiting Doesn’t Make Cents!

Historically low-interest rates and attractive home prices have combined to make the current housing market one of the most affordable in decades.  While patience can sometimes be a virtue, for those who think a home purchase is in their near future, waiting just doesn’t make “cents”.

For example, the monthly payment to purchase a $300,000 home with 10 percent down and a 30-year fixed mortgage at an interest rate of 5 percent would cost $1,449.  Yet, if rates rise to 6 percent and home prices increase 5 percent, that same purchase would end up costing an additional $3,000 a year.

Figures from the National Association of Realtors shows the favorable gains that recent first-time buyers have enjoyed in housing affordability.  The average sale price of a typical starter home dropped nearly 24 percent from 2007 to 2010. That equates to a savings of $40,000 on the purchase of a home.

The same report shows that interest rates dropped from approximately 6.5 percent to under 5 percent to make a home purchase even more affordable. As a result, a first-time buyer’s monthly payment dropped nearly $400 from $1,083 to $709 and the income needed to qualify to purchase a starter home dropped from $52,000 in 2007 to $34,000 today.

While holding off on buying might have been a good strategy a few years ago, today’s market conditions are just too favorable to wait for a better opportunity that isn’t likely to come. With home prices appearing to stabilize or increase in many markets (including many areas in Northern Virginia), and with signs pointing to interest rates on the rise, it seems likely that a home purchase will cost more in the future than it does today.

Happy Sunday!!!

Be prepared…when you find the home you love and put in an offer, remember that what you are putting down for the house is not the only cost you will have at the closing table.  Additionally, as a seller you have costs as well…don’t be caught off guard and be sure to talk to your agent and lender prior to your home search to get an idea of what these costs could be so that you are prepared.  Here are costs to expect:

Buyers:

• Lender fees include charges for loan processing, underwriting, preparation and establishing an escrow account.
• Third-party fees include charges for insurance, title search, and other inspections such as termites.
• Government fees include deed recording and state & local mortgage taxes.
• Escrow and interest fees include homeowner’s insurance, loan interest, real estate taxes, and occasionally private mortgage insurance.
• ** An Earnest Money Deposit** this will have been collected at the time you make the offer and is held in escrow from the time the contract is ratified and held until closing.  This is an important part of your offer to purchase the home.  The EMD is typically 1.5-2% of the purchase price, so make sure to be prepared to write this check when you are putting together the offer.  This is your demonstration to the seller that you are serious and able to buy.  Additionally, the seller has something to hold on to if you default for a reason that is not outlined as a reason to void the contract in the terms of the contract.  It is also refundable if the contract is voided for reasons set forth in the contract.  If all goes well and no one voids, this money will be applied at closing towards the purchase of the home and will offset some of the costs you will be responsible for on the day of closing.

Sellers:

• Title insurance fees depend on the sales price of the home.
• Broker’s commission is a full-service fee and will cost anywhere between 6% to 8%.
• Local property transfer tax, county transfer tax, state transfer tax, and state capital gains tax are the charges that you’ll pay for the privilege of selling your home. Credit to the buyer of unpaid real estate taxes for the prior or current year are variable and depend on when you close and when your taxes are due.
• FHA fees and costs are all fees are now negotiable between a FHA buyer and seller.
• Home inspections fees, while in most instances are paid for by the purchaser, are in some circumstances paid for by the seller and include pest, radon and other inspections.
• Miscellaneous fees can accrue from correcting problems noticed during the home inspection.  These you will typically fix and pay for prior to closing, but some seller often offer a credit at closing intended to be used for correcting problems.

Purchasing and selling a home costs money, but the benefits of home ownership far out way the costs at the closing table…preparation is key…

Happy Wednesday!