Oct 28, 2019 | Financial Reports
Last week’s economic news included readings on sales of new and previously-owned homes and consumer sentiment. Weekly readings on mortgage rates and first-time jobless claims were also released.
New Home Sales Dip in September
Commerce Department readings indicated fewer sales of new homes than in August. 701,000 sales were reported in September on a seasonally-adjusted annual basis; 706,000 new homes were sold in August and analysts expected 700,000 sales of new homes.
Sales fell by 0.70 percent month-to-month but were 15.50 percent higher year-over-year. September was the second time in 12 years that new home sales exceeded 700,000 in consecutive months.
Sales of new homes were lower in three of four regions. Sales fell by -2.80 percent in the Northeast and were -3.80 percent lower in the West. New home sales fell -0.20 percent in the South but rose + 6.30 percent in the Midwest. The median sale price of new homes fell in September, which indicated that builders may be building more affordable homes.
In recent years, builders concentrated on building high-end homes. Real estate pros said there was a 5.50 month supply of new homes available in September as compared to the benchmark reading of a six month supply of homes for sale that indicates markets are balanced between home buyers and sellers.
Sales of pre-owned homes also fell in September.5.38 million previously-owned homes were sold on a seasonally-adjusted annual basis. Analysts expected 5.40 million sales and 5.50 million pre-owned homes were sold in August.
Mortgage Rates Rise; Initial Jobless Claims Fall
Freddie Mac reported higher mortgage rates last week as the average rate for a 30-year fixed-rate mortgage rose six basis points to 3.75 percent. The average rate for a 15-year fixed-rate mortgage rose three basis points to 3.18 percent.
Rates for 5/1 adjustable rate mortgages averaged 3.40 percent and were five basis points higher. Discount points averaged 0.50 percent for fixed-rate mortgages and 0.20 percent for 5/1 adjustable rate mortgages.
New jobless claims fell last week; 212,000 first-time claims were filed. Analysts expected 215,000 claims based on the prior week’s reading of 218,000 initial claims. Analysts said there were no indications of rising layoffs and noted that new jobless claims stayed near a 50-year low.
October’s Consumer Sentiment Index fell to an index reading of 95.50 as compared to September’s reading of 96.00. Consumers surveyed were less anxious about trade disputes with China than in September.
Readings for the University of Michigan’s consumer sentiment index have held steady in recent months, but remain below the post-recession peak reading of 101.40.
What’s Ahead
This week’s scheduled economic news includes readings from Case-Shiller on home prices and a statement from the Fed’s Federal Open Market Committee on monetary policy decisions.
The Labor Department also reports on Non-Farm Payrolls and national unemployment is also scheduled along with weekly readings on mortgage rates and first-time jobless claims.
Oct 25, 2019 | Real Estate
If you happen to want to move to a hot market for home sellers, here is some advice. Go looking for a home to buy when it is freezing outside or the weather is otherwise severe. Buying a home is both about finding one you like and beating out others if the market has buying competition.
Days On Market
To find out the competition for a particular market, check the median number of days that a home is listed on the market before it sells. This is called the “days on market.”
In a hot seller’s market, the median number of listing days may be very low. The national average days on market (DOM) is 62 days in America.
The top ten cities where homes sell the fastest with the lowest DOM as reported by Realtor.com® are:
- San Francisco, CA – DOM 28
- Spokane, WA – DOM 31
- Boston, MA – DOM 32
- Colorado Springs, CO – DOM 32
- Lafayette, IN – DOM 34
- Columbus, OH – DOM 34
- Sacramento, CA – DOM 34
- Santa Cruz, CA – DOM 34
- Midland, TX – DOM 36
- Odessa, TX – DOM 36
Time Of Year
Most homebuyers look for a home during spring and summer. That is when the buying competition is normally stronger. June is the worst month to buy a home if you want to get a discount.
If you can wait until fall or winter, you may see more price reductions. The best time to make a low offer may be during the short window of time between Christmas and New Year’s when virtually no one is looking to buy a home.
Use bad weather for an advantage. Go looking for a home in the dead of winter, when the roads are barely passable, and you may be the only buyer interested. Another advantage that comes from viewing a home during severe weather is that you get to see how much trouble the weather will be if you own it.
Tax Time
One very successful real estate investor buys homes right before tax time because that is when sellers are worried about paying taxes and might be more flexible on the price.
Estate Sales
It is possible to get a nice deal on a house when a family is liquidating assets.
Divorce
A seller may be motivated by having to sell a house as part of a divorce settlement.
Summary
The main factors, if you want to get a discounted price for buying a home, are not to be in a rush to buy one and take your time finding a home that is for sale by a motivated seller. Always ask, “Why are you selling your home?” when negotiating with a seller.
And as always, ask your trusted real estate professional for advice to negotiate the best deals in your local marketplace!
Oct 24, 2019 | Mortgage
Recent medical school graduates, saddled by high student loan debt, sometimes have a hard time qualifying for a first mortgage. Now, however, a growing number of lenders will consider future earnings potential of high earners in the medical profession as a way to offset high debt ratios. But specialty mortgages for young physicians aren’t the only unique loans available today.
Nationwide, there are a number of unique programs designed to help first-time buyers qualify for a mortgage loan. While some target specific professions, others are open to a wider range of applicants. They are definitely worth exploring if you’re interested in buying a home, but are not able to qualify for a standard home loan.
Here are some of the better known, widely-available options:
Good Neighbor Next Door
A HUD-sponsored program, this not-so-well-known option is available to firefighters and law enforcement officers, emergency medical technicians and teachers. The loans provide a discount of up to 50 percent of the asking price in select zones in the country known as revitalization areas. One stipulation is that the borrower must agree to live in the home for at least three years.
VA Loans — Zero Down
For anyone who has served in the military, and certain authorized civilian employees of the government, the zero down VA loan is one of the best specialty mortgages available.
Home Path
Fannie Mae and Freddy Mac programs offered to low and moderate-income families also provide guidance and home-ownership information that can be invaluable for first-time borrowers. The education programs are specifically designed to address the common misconceptions about buying as well as providing education about property maintenance and financial responsibility.
Energy-Efficient Mortgage (EEM)
This specialty mortgage allows homebuyers to add green features to a home without making a larger down payment or paying a higher interest rate. The cost of energy-efficient improvements is simply rolled into the primary FHA or VA mortgage. It can be a cost-effective, simple way to add desirable improvements as well as value to a home.
FHA Rehabilitation Program
If a fixer-upper seems like the way to go for your specific situation, the FHA 203(k) program offers a loan option that might be a good fit. Basically, this mortgage is based on the value of the home after improvements are completed, and carries a down payment requirement as low as three percent. The funds needed for rehabilitation are included in the primary loan.
Native American Direct Loan
Essentially a VA loan for Native American veterans, this mortgage program is for homes on federal trust lands; it is a zero down 30-year fixed-rate mortgage with a low interest rate.
State And Municipal Programs
Many states and cities have grants or specialty programs available. It is always worth checking with local jurisdictions to what is offered that you might qualify for.
Interest Only Or Extended Term
Two other types of mortgage that are available to serve special needs borrowers are interest only loans and mortgages with terms up to 40 years.
Be sure to ask your mortgage broker or lender for specifics about which financing option may be best for you.
With your financing pre-approved, you are now ready to contact your trusted real estate professional to help you find your new home.
Oct 23, 2019 | Mortgage
PMI, which is also called private mortgage insurance, is protect that the lender may ask the buyer to purchase. In the event that the buyer defaults on their home loan and the home enters foreclosure, the lender has a way to recoup their losses.
While the lender may not ask everyone to purchase PMI, there are some situations where the lender may ask the buyer to purchase this insurance policy to qualify for the loan.
Every lender is a little bit different; however, there are some trends throughout the industry. Most lenders ask the buyer to place a down payment of about 20 percent of the total price of the house. If the buyer is not able to put at least 20 percent down on a home, the loan is riskier for the lender. In this case, the lender may ask the buyer to purchase a PMI policy.
The Structure Of A PMI Payment
Typically, the PMI policy is paid in a monthly manner. It is included as a part of the total mortgage payment as the buyer pays the loan back to their lender. The positive news is that the buyer typically does not have to pay PMI for the life of the loan. Once the equity in the home reaches about 22 percent, the lender typically terminates PMI.
In some situations, the buyer may be able to contact the lender and ask for PMI termination at an earlier date. Some people can negotiate this percentage or time period in advance of taking out the loan.
The Cost Of Private Mortgage Insurance
In general, the cost of a PMI policy is dependent on the value of the mortgage loan. It typically runs somewhere between 0.5 percent and 1 percent of the total value of the mortgage loan. Therefore, this can raise the monthly mortgage payment by a significant amount.
For example, if someone receives a $300,000 loan from the bank with a PMI policy of 1 percent, the buyer will have to pay an extra $3,000 per year as part of their mortgage payment. This is an extra $250 per month on their total payment. For some people, this additional cost might make their dream house unaffordable.
Therefore, whenever possible, buyers should try to work with their trusted professional mortgage lender and look at options to avoid purchasing PMI. Every lender is a little bit different when it comes to private mortgage insurance.
If you are in the market for a new home or interested in listing your current property, be sure to consult with your trusted real estate professional.
Oct 22, 2019 | Real Estate
You might be wondering whether to replace your roof before listing your property. Most reputable real estate agents will advise you only to do so if your current roof isn’t likely to pass inspection or if replacing it will significantly raise the value of your home.
Here is some valuable information to help you decide.
Pros Of Replacing Your Roof Before You Sell
Buyers are attracted to homes with curb appeal and online photos highlighting a new roof will attract a lot of traffic. That means you may sell your home more quickly. Roofing replacements also help you when it comes time to negotiate a sales price. Buyers will be willing to pay more for the security of knowing they won’t need a new roof anytime soon.
Cons Of Replacing Your Roof Before A Listing
Putting on a new roof is a huge financial commitment. It may not be one you’re willing to assume before moving into a new property. Other problems may arise that delay construction or cause cost overruns. Both of these scenarios impact your ability to look for a new home right away, meaning you can’t put the current one up for sale.
Consider Repairing It Instead
If your roof is in decent shape, talk to an expert about whether it needs to be repaired. If there’s structural damage, chances are an inspector or appraisal will request repairs prior to closing anyway. You may want to just get it taken care of. If the roof is in good shape but doesn’t look great, it may just need to be cleaned and spruced up. A roofing expert can give you some great ideas that are within your budget.
Should You Replace Your Roof?
Ultimately, it’s your decision. It’s important to determine how much a new or repaired roof adds to the price you’re likely to get. Dealing with construction on a home that no longer meets your needs is stressful. If the roof needs a lot of work, it may be worthwhile to offer a concession to the buyer — you essentially give them the money to fix it when they move in — so you can move out and move on sooner. Your time frame is another factor to consider. If you don’t have a lot of time, leaving this task to the buyer may be your best option.
If you are in the market for a new home or interested in listing your current property, be sure to consult with your trusted real estate professional.
