Real Estate Information

A small sign that the real estate market is headed in the right direction is
the fact that banks are relaxing their loan standards a bit.  Conventional mortgages are making a comback because for the first time in years they are only requiring a 5% down payment.  Before this, a buyers only option was a conventional mortgage with a downpayment minimum of 10% or the Government backed FHA program that required only 3.50%.  But recent changes in Private Mortgage Insurance (PMI) have made FHA less attractive as it once was.  The one time upfront PMI fee was reduced to 1.0%...BUT... the ongoing PMI fee has been raised to 1.15% on an annual basis!  This really increases the monthly payment for a borrower and reduces their purchasing power.

  A few other things to consider with FHA....You can't get rid of the monthly
PMI for a minimum of 5 years and you must have 12 on-time payments prior to
attempting to do so.  You also need to have 22% equity in the property in order to remove the PMI.  When the property is appraised...that appraisal stays with
the property for 6 months.  That means all FHA buyers attempting to purchase
that home within 6 months of the appraisal must adhere to the value allocate and any/all property deficiencies noted in the report.

  So weigh your options and I'd be happy to give you a referral to a great loan
originator...because a conventional loan might end up providing you with a lower payment even though the rate might be a bit higher.  If you are a buyer with a small downpayment, decent credit and decent income...you now have more options....which is a good thing!  Happy Summer!

Should I Buy a Home Now?

I’m often asked if this is a good time to buy a home.  Some clients are concerned that home prices may fall further than they have already.  They are assuming that the best course of action is to wait for the bottom in the market and then buy.  The problem with this approach is that you don’t know where the bottom is until you see it in the rear view mirror, meaning until you’ve missed it!

Home prices are one factor in determining your cost of ownership, but so are interest rates and financing availability.  Even though interest rates have gone up in the last six months, they are still near historic lows.  Since your monthly mortgage payment is a combination of paying down your principal and paying the interest owed, if home prices come down a little further but interest rates go up, it could cost you even more to service a mortgage on an identical home!

While a home is a major investment, it is also the center of your personal life.  It’s important to live in a home that reflects your taste and values, yet is within your financial “comfort zone.”  To that end, it may be more important to lock in today’s relatively low interest rates and low home prices, rather than to hope for a further break in prices in the future.

Please give me a call if I can be of any assistance in determining how much home you can afford in today’s market.