December 2014

6 Reasons to Buy Now!

To take advantage of near-record low mortgage interest rates and home prices undervalued by as much as three percent nationwide, now is a great time to buy a home.

You’ve already missed the bottom of the market, but that doesn’t mean there aren’t great buys to be had out there. Your community may not have appreciated as quickly as some of the big metro areas have recently. Your boom may yet come. 

But there are even better reasons to buy a home right now. Here are just a few:

1. More jobs are available

The Labor Department announced that the jobless rate is now below six percent. Consider how far the job market has come since January 2010 when unemployment was 9.7 percent

2. Houses hedge against inflation

The Consumer Price for All Urban Consumers is up 1.7% from August 2013 to August 2014, excluding volatile food and gas prices. The food index has risen 2.7 percent over the span, while the energy index has increased 0.4 percent. This is the first month that the index hasn’t risen since 2010.

Why is that good for homeowners? Even in a tepid inflationary environment, when prices rise, a major asset such as a home, purchased at a fixed cost, becomes more valuable. Typically, in an inflationary environment, housing prices rise.

3. Housing price gains are slowing

The median existing-home price in August was $219,800, which is 4.8 percent higher than home prices in August 2013. This marks the 30th consecutive month of year-over-year price gains. In 2013, home prices rose in the double digits.

4. Mortgage interest rates are still low

According to Freddie Mac’s archives, the lowest that mortgage interest rates have been in modern history (since 1971) was in November and December 2012 at 3.35 percent with 0.7 points for a benchmark 30-year, fixed-rate loan, and that was back in 2012 before the housing recovery began in earnest. The most recent Freddie Mac survey found national averages at 4.16 percent with .05 percent points in September 2014.

5. Pent-up demand ready to release

Household Formation has been muted since the Great Recession, preventing as many as 2.5 million people from forming households who otherwise would have. Economists with Harvard’s Center for Joint Housing Studies predict that annual U.S. housing starts should average 1.4 to 1.5 million over the coming decade. Considering that the largest generation ever –81 million Echo Boomers — are well into renting and homebuying age, the numbers should be closer to the 2.3% annual growth of the 1970’s, when 78 million Baby Boomers reached adulthoo

6. Buy VS rent ratios favor homeownership

Trulia, a real estate marketplace and research group announced that nationally, rents rose 6.5% year-over-year in September 2014. Apartment rents were up 6.9%, while single-family home rents gained 5.2%. At the same time, housing prices have leveled off.

The Takeaway

A housing market never remains even. There are always surges and dips. Buyers could wait for better market conditions, but the present alignment of low mortgage interest rates, slowing home prices, rising rents and pent-up demand add up to great reasons to buy a home right now

Via [Realty Times]

7 Reasons to Get Pre-Qualified before House Hunting

Question: I want to start looking for a home, but several people suggested agents won’t take me seriously without a pre-approval letter. I understand the pre-approval must be updated every 30 days, and a credit check hurts my credit score. How do I avoid being punished for planning ahead and beginning my search far in advance of the target move date?

Answer: A pre-approval from a mortgage lender has gained more importance in real estate transactions than ever before. There are many reasons that reward you, not punish you, for making the effort toward mortgage loan pre-approval.

It is a wise move to start your search early. You do not have to update your pre-approval status if your circumstances to not change, and the effects of a lender verifying your status while you shop for a mortgage will have little impact on your credit score.

A formal loan application for a loan on the property you ultimately chose, subject to financing, is the only other time you will have to circle back.

Lenders have different criteria in determining buying power, so that pre-qualifying will go a long way toward a positive experience. Here are the key benefits of pre-qualification:

• You know in advance what you can afford.

• You save time not looking in the wrong price range.

• You get the lender’s perspective of the local marketplace.

• Your future agent will see your pre-approval as a positive sign you are serious.

• A source of financing can influence the seller’s reaction to an offer.

• It can lead to a more efficient and faster closing.

• you learn about the financial alternatives available to you and have time to consider them.

After you have been pre-qualified and found the right home, you will have to fill out an application and submit the information you initially collected, plus depending on when you buy, underwriting will most likely request updated and additional data.

Your financing source

There are many aspects to consider before you pick a lending source. Do an Internet search for reviews on the lenders. Changes in government oversight of lending rules and procedures have stiffen and in many cases created an atmosphere where obtaining a home mortgage is more difficult. For example, late payments may result in higher interest rates. When choosing a source you should consider how competitive their rates are; the types of mortgages they offer, specifics on each loan, the cost to borrow and how they service their loans. Seemingly tiny differences can have a big effect on the cost or convenience of a loan product. Here is a starter list of questions to ask.

• What different types of mortgages do you offer?

• Do you sell the mortgage after you have originated it? If so, who services the loan going forward?

• Do you provide a written estimate of the monthly payments and a breakdown of the closing costs?

The lending process can be confusing because loan officers will spend time and energy trying to convince you they are the best mortgage source. But when their underwriters spend even more time asking follow-up questions and challenging your application, it can be confusing.

Conflicting signals are due to the complementary roles the loan origination (sales), and underwriting (risk control) functions play within the organization. Just being aware of the conflicting positions may help in cutting down on the frustration it can cause.

What to expect

Mortgage lending is an extremely competitive field, and it will pay dividends to shop for a loan. You want lenders to compete for your business.

There are many sources of loans that will reveal themselves when you use the tools available to seek them out. In addition to banks and credit unions, mortgage brokers have many loan products and specialize in mortgage loans only. They are strictly commission-based and work more like real estate agents.

Online mortgages are available and underwritten by some of the largest financial institutions in the country. VA mortgages are available for many veterans with no downpayment required.

A common error in lending happens after the pre-approval of a home loan. The buyers purchase a car before the closing! The lender rejects the closing because their circumstances have changed. This circumstance and others have killed many closings. Don’t let it happen to you.

Via [AZ Central]

Oh the Weather Outside is Frightful but the Deals are sooo Delightful!

Alright, alright… I know we are in Arizona and, for the most part, the weather is quite delightful too!  This time of year is why we live here, right?

Take a look at the inventory levels for November (chart below).  There is quite the jump from October and quite the drop in sales for November.  This is normal for this time of year.  Thanksgiving week is actually the slowest week in real estate every year.  This creates an interesting opportunity for buyers.  The sellers that are on the market between now and the end of the year are usually highly motivated to sell.  Get off the fence, Buyers!  Interest rates are great which allows for more affordability on top of the great deal that you are likely to negotiate at this time (assuming you are aligned with the ninja negotiators at Team Evolution).  Sellers, now isn’t a terrible time to sell.  I’ve actually sold homes on Christmas Day before.  As long as your price and condition are appropriate for your area, you should have no trouble.  Our current listings have flown off the shelves!