Tag Archives: Mortgage Rates

Why Buyers May Lose If They Don’t Act Now

Rising mortgage rates could have a big impact on buying a home when shopping for real estate, economists warn. “Every time the interest rates go up, you eliminate a group of people who can no longer afford to buy a house,” Some people may have to rent for a period of time until they make more money, or buy a smaller house,” says Laura Boyajian of Wise Choice Properties, Historic Phoenix Homes Specialist.

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To avoid further complications in their plans, your home buyers may want to speed up their home search this Spring as interest rates are forecasted to move higher in the coming months. Forty-four percent of home buyers say rate increases likely will force them to settle for a smaller, less expensive home that requires a longer commute to their jobs, according to a realtor.com® survey. First-time home buyers may be most affected by rising costs, as increasing home prices and interest rates price some out of the market.

Mortgage rates are at their highest levels in more than four years. The 30-year fixed-rate mortgage averaged 4.46 percent last week, according to Freddie Mac, and that’s largely expected to increase since the Federal Reserve said it is likely to raise its short-term interest rates this year. That could prompt mortgage rates to move higher at least three times this year, starting this month.

“For the bulk of buyers, it’s not going to kill their decision to purchase a home,” Rick Palacios Jr., director of research at John Burns Real Estate Consulting, told realtor.com®. “If anything, it will get them off the fence by creating a sense of urgency.” Higher rates are “a kick in the pants for you to start thinking seriously about buying.”

Rate increases, even minor ones, can add up over time. Realtor.com® offers this example: On a $300,000 house with a 30-year fixed-rate mortgage and 20-percent down payment, the difference between a 4 percent and 5 percent mortgage rate is $142 a month. Calculated over the life of the loan, that is more than an extra $51,000. “Buyers thought they could wait forever because rates were going to stay low forever,” says Boyajian. “They’re starting to realize that if they’re going to buy, they should probably buy now.”

Home buyers who are concerned about rising rates may want to lock in with a lender, which guarantees the current rate for a set period of time. Still, don’t let your clients linger on making a decision. It typically costs several hundred dollars to lock in a rate.

If you are interested in a free consultation to see if buying a Phoenix home is a better option for you and get pre-approved for a home loan, please call or email me today. You may be surprised at what you learn. I have access to programs that offer down-payment assistance with money you do not have to pay back. 

Whether you’re buying or selling a home in Central or Downtown Phoenix, or just have some questions about anything at all in or about any one of the historic districts in Phoenix, I’d be very happy to help you! Just call or email me anytime.

Arizona counties rank high as best places to get a mortgage

Home buyers looking to head back into the market in Arizona may do so in a state where it’s pretty decent to get a mortgage.

Historic Phoenix Home Grants

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A new SmartAsset.com look at the best counties for getting a mortgage finds those in Arizona among the tops in the country. Pinal County came in first in the state and No. 34 nationally.

The report looked at five-year borrowing costs for as a ranking measure, but also examined property taxes, loan funding rates and annual mortgage payments to determine a composite score.

While the state’s most populous counties, Maricopa and Pima, ranked well nationally they were behind the curve in the state, ranking No. 3 and No. 9 respectively.

The best counties to get a mortgage mostly reside in Florida, with six of the top 10 in the ranking in the Sunshine State.

Methodology

For many people buying a house means securing a mortgage. To determine the best places in the country to get a mortgage we looked at four factors: overall borrowing costs, ease of securing a mortgage, cheap property taxes and cheap annual mortgage payments.

To calculate the overall borrowing costs, we looked at the expected costs over the first five years of a $200,000 mortgage with a 20% down payment, including closing costs. We calculated the ease of getting a mortgage as the ratio of mortgage applications to actual mortgage originations (secured mortgages) in each county. We based annual mortgage payments on the annual principal and interest payments for a $200,000 loan in that location, using average mortgage rates in each county.

Finally, we ranked locations based on these four factors, and then averaged those rankings, giving equal weight to each factor. The areas with the lowest average rankings are the best places to get a mortgage.

Rank County Loan Funding Rate 5 Year Borrowing Costs Property Tax Annual Mortgage Payment Best Mortgage Markets Index
1 Pinal, AZ 63.16% $76,932 $12,606 $14,789 94.24
2 Gila, AZ 58.11% $76,932 $10,586 $14,789 93.08
3 Maricopa, AZ 64.40% $77,437 $9,638 $14,789 76.73
4 Coconino, AZ 62.61% $77,437 $8,294 $14,688 76.70
5 Yavapai, AZ 61.05% $77,437 $9,001 $14,789 75.54
6 Mohave, AZ 59.90% $77,437 $9,166 $14,789 74.90
7 Yuma, AZ 62.26% $77,437 $11,292 $14,884 74.74
8 Graham, AZ 56.77% $77,437 $8,009 $14,789 74.13
9 Pima, AZ 62.13% $77,437 $13,620 $14,688 73.28
10 Cochise, AZ 55.76% $77,437 $9,981 $14,789 72.47
  AZ 56.00% $77,370 $10,134 $14,775
Methodology

Sources: Mortgage Bankers Association, US Census Bureau 2015 5-Year American Community Survey, Informa, Bankrate, government websites, SmartAsset

REPORT: Phoenix Ranked Second-Best Metro Area For Homeowners

Bankrate.com Aug 31, 2016

The Phoenix metro area is the second-best in the nation for homeowners, according to a Bankrate.com report released Wednesday.

phoenix,az,market report,real estate,historic,bestPortland, Phoenix, Atlanta, Las Vegas and Minneapolis/St. Paul round out the best metropolitan areas for homeowners, according to the report. Bankrate.com is a leading aggregator of financial rate information and this marks their first time releasing such a report.

The study reviewed eight factors: home affordability; price appreciation; property taxes; homeowners’ insurance, energy and maintenance costs; foreclosures and how rapidly rents rose over the past six years for which data are available.

Phoenix ranked high on the list for several reasons, including strong home-price appreciation, few foreclosures and inexpensive homeowners’ insurance, according to the report.

“Phoenix was one of the best cities in all the categories we looked at,” said Claes Bell, Bankrate.com analyst. “We were looking to see which cities were the best for attainability, sustainability, affordability and if there was a rewarding financial benefit to owning a home in these areas.”

The Phoenix area scores fifth lowest on the scale of rent hedging, which is a way of measuring rent increases compared with the home price appreciation. In Phoenix, house prices have also been rising faster than rents over the past five years, contributing to the Valley’s high ranking. The Phoenix metro area had the tenth highest energy cost among the 50 metro areas, a reflection of high air conditioning bills during the summer months, according to Bankrate.com.

Home values plunged during the housing bust, but now they are recovering, according to Bankrate.com, and the pace of home appreciation in Phoenix in the last five years is second fastest among the 50 largest metro areas.

The greater Phoenix area also has bounced back from the foreclosure crisis. For the last three years the city has had the second lowest foreclosure rate among top metro areas.

“Builders stopped building during the housing bubble and now demand beats out supply,” Bell said. “Phoenix is no different in that way from the rest of the country. What’s different is the property tax rate and the affordability of the home itself. In cities like New York and L.A., housing costs are half to three-quarters of a person’s annual income.”

Strong home-price appreciation over the past five years is a common thread in Phoenix, Atlanta and Las Vegas. The Twin Cities’ best housing attributes are strong home-price appreciation and a dearth of foreclosures.

Hartford, Connecticut ranks last because of high carrying costs: It has above-average property tax, energy, homeowners’ insurance and maintenance fees. The New York City metro area is second-worst due to high property taxes, minimal home-price appreciation and expensive maintenance costs. Only Los Angeles (fourth-worst) prevented a northeastern sweep of the bottom five (Providence is third-worst and Buffalo is fifth from the rear), according to the report.

“Major cities in the middle of the country did really well in this ranking,” Bell said in a press release. “Out of the top 15 metro areas, only one is within 250 miles of an ocean. Homeowners in America’s largest coastal cities face a number of challenges, ranging from sky-high mortgage payments gobbling up an outsized portion of homeowners’ incomes to high property insurance rates, especially in hurricane-prone areas, and our ranking reflects that.

It’s a terrific time to buy or sell a home in the Phoenix Metro area.

Mortgage Rates Hover Near All-Time Low

HISTORICPHOENIXDISTRICTS.COM DAILY REAL ESTATE NEWS | FRIDAY, JULY 01, 2016

Fixed-rate mortgages this week dropped to their lowest averages of the year, which analysts attribute to the fallout from last week’s “Brexit” vote.

The 30-year fixed-rate mortgage averaged 3.48 percent this week, only 17 basis points from its all-time record low of 3.31 percent in November 2012, Freddie Mac reports.

“In the wake of the Brexit vote, the yield on the 10-year U.S. Treasury bond plummeted 24 basis points,” says Sean Becketti, Freddie Mac’s chief economist. “This extremely low mortgage rate should support solid home sales and refinancing volume this summer.”

Freddie Mac reports the following national averages for the week ending June 30: 

  • 30-year fixed-rate mortgages: averaged 3.48 percent, with an average 0.5 point, falling from last week’s 3.56 percent average. Last year at this time, 30-year rates averaged 4.08 percent. 
  • 15-year fixed-rate mortgages: averaged 2.78 percent, with an average 0.4 point, dropping from last week’s 2.83 percent average. Last year at this time, 15-year rates averaged 3.24 percent. 
  • 5-year hybrid adjustable-rate mortgages: averaged 2.70 percent, with an average 0.5 point, falling from last week’s 2.74 percent average. A year ago, 5-year ARMs averaged 2.99 percent. 

Source: Freddie Mac

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It’s never been a better time to buy a home. Money is inexpensive but that doesn’t mean you should spend a lot, unless you’re wealthy, of course. Call Laura B. for a free consultation on buying a home in any one of the Historic Phoenix Districts, historic adjacent, Uptown, Midtown, Downtown, Scottsdale, Biltmore, Paradise Valley, Arcadia or Surrounding suburbs.

Mortgage Rates Reach a New Low for 2016

mortgage rates,2016,real estate,phoenixThe 30-year fixed mortgage rate dipped to its lowest average of the year this week, averaging 3.58 percent, Freddie Mac reports in its latest mortgage market survey.

“Demand for Treasuries remained high this week, driving yields to their lowest point since February,” says Sean Becketti, Freddie Mac’s chief economist. “In response, the 30-year mortgage rate fell 1 basis point to 3.58 percent. This rate represents yet another low for 2016 and the lowest mark since May 2013.”

Freddie Mac reports the following national averages with mortgage rates for the week ending April 14:

  • 30-year fixed-rate mortgages: averaged 3.58 percent, with an average 0.5 point, dropping from last week’s 3.59 percent average. Last year at this time, 30-year rates averaged 3.67 percent.
  • 15-year fixed-rate mortgages: averaged 2.86 percent, with an average 0.5 point, falling from last week’s 2.88 percent average. A year ago, 15-year rates averaged 2.94 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 2.84 percent, with an average 0.4 point, rising from last week’s 2.82 percent average. Last year at this time, 5-year ARMs averaged 2.88 percent.

It’s a great time to buy a home in Phoenix, Arizona. Call Laura B. today to begin the process of buying your historic Phoenix dream home.

Source: Freddie Mac

THE MORTGAGE TRICK THAT COULD SAVE YOU $100,000 OR MORE

Should you switch to a 15-year mortgage?

If paying off your house is a priority, you’ve obviously considered it. “One of the biggest benefits of a 15-year mortgage term is the ability to quickly pay off your home loan,” said Money Crashers. “This option is perfect if you plan to stay put and don’t want to pay your mortgage for a lengthy period of time.” 15 year mortgage

But even if you’re not planning to live in your home forever, a 15-year mortgage can be a great way to go because of the money saved. And we’re not talking about pennies. We’re talking hundreds of thousands of dollars.

“The 30-year fixed mortgage is practically an American archetype, the apple pie of financial instruments. It is the path that generations of Americans have taken to first-time home ownership. According to the Mortgage Bankers Association, 86% of people applying for purchase mortgages in February 2015 opted for 30-year loans,” said Investopedia. “But many of those buyers might have been better served if they had opted instead for a 15-year fixed-rate mortgage, the 30-year’s younger, and less popular, sibling. A shorter-term loan means a higher monthly payment, which makes the 15-year mortgage seem less affordable. But, in fact, the shorter term actually makes the loan cheaper on several fronts.”

The savings is substantial

“Imagine a $300,000 loan, available at 4% for 30 years or at 3.25% for 15 years,” they said. “The combined effect of the faster amortization and the lower interest rate means that borrowing the money for just 15 years would cost $79,441, compared to $215,609 over 30 years, or nearly two-thirds less.”

According to The Mortgage Reports, going with a 15-year mortgage translates to a reduction in “the amount of mortgage interest paid over the loan’s life by $44,000 per $100,000 borrowed as compared to a 30-year loan. For loans at the conforming loan limit of $417,000, then, a homeowner would save $183,000 by using a 15-year mortgage to finance the home instead of using a 30-year one.”

That’s a lot of money. But it’s that higher monthly payment that is often the sticking point for many borrowers. The monthly payment on a 15-year loan will cost more than one that’s double in length for obvious reasons—you’re paying off more money in less time. But the two loan terms do not offer an apples-to-apples comparison because the interest rates for 15-year mortgages tend to be lower.

“15-year-loans are less risky for banks than 30-year loans, and because the money banks use to make shorter-term loans costs them less than the money they use to make longer-term loans, consumers pay a lower interest rate on a 15-year-mortgage — anywhere from a quarter of a percent to a full percent (or point) less,” said Investopedia. “And the government-supported agencies that finance most mortgages impose additional fees, called loan level price adjustments, which make 30-year mortgages more expensive.”

The monthly payment on the 30-yer mortgage referenced above is $1,432. On the 15-year loan, it comes out to $2,108. That steep increase is often a deterrent for borrowers – especially those who are more concerned with their current monthly input and output than potential long-term savings.

Doing it on your own

Of course, a 15-year mortgage isn’t the only way to pay your house off sooner. Making additional principal payments can eat away at your balance without tying you to a higher monthly payment. Even one extra payment per year can make a big difference.

“Making an extra mortgage payment each year (totaling 13 payments in a 12-month period) could reduce a 30-year mortgage loan to approximately 22 years,” said Nationwide.

“The most budget-friendly way to do this is to pay 1/12 extra each month. For example, by paying $975 each month on a $900 mortgage payment, you’ll have paid the equivalent of an extra payment by the end of the year.”

Overpaying also offers a shorter path to an equity position, so when you are ready to sell, you have more equity in your home and are in a greater buying position. And if you do get into a situation where you need cash you can always pull the equity out of your home.

If you’re on the fence and are thinking about buying a historic home in Phoenix, please call Laura B. Browse all historic Phoenix Districts and their homes for sale.

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Mortgage Rates Move Lower Than Expected

DAILY REAL ESTATE NEWS | FRIDAY, FEBRUARY 05, 2016

Janet Yellen Interest Rates

For the fifth consecutive week, mortgage rates trended down, surprising even forecasters. The 30-year fixed-rate mortgage is now at its lowest average since April 30, 2015.

“Market volatility — and the associated flight to quality — continued unabated this week,” says Sean Becketti, Freddie Mac’s chief economist. “The yield on the 10-year Treasury dropped another 15 basis points, and the 30-year mortgage rate fell 7 basis points as well, to 3.72 percent. Both the Treasury yield and the mortgage rate now are in the neighborhood of early-2015 lows. These declines are not what the market anticipated when the Fed raised the Federal funds rate in December. For now, though, sub-4-percent mortgage rates are providing a longer-than-expected opportunity for mortgage borrowers to refinance.”

This week the market forecasted zero hikes in 2016 for the Fed’s short-term rates, which could keep mortgage rates low. Analysts are now predicting that the closely monitored Fed Futures market has nearly a 60 percent chance of no rate hikes at all this year, marking a “dramatic U-Turn from only a month ago when the market was pricing in a 75 percent probability the Fed would increase rates at least once in 2016,” CNNMoney reports.

The Fed had risen rates 0.25 in December, its first increase in nearly 10 years. But with stock markets spiraling downward and the fragile global economy, analysts believe this will likely prompt the Fed to pause in raising rates.

“Things have happened in financial markets and in the flow of economic data that may be in the process of altering the outlook for growth,” Fed vice chairman Bill Dudley told MarketWatch this week.

Freddie Mac reports the following national averages with mortgage rates for the week ending Feb. 4:

  • 30-year fixed-rate mortgages: averaged 3.72 percent, with an average 0.6 point, dropping from last week’s 3.79 percent average. A year ago, 30-year rates averaged 3.59 percent.
  • 15-year fixed-rate mortgages: averaged 3.01 percent, with an average 0.5 point, falling from last week’s 3.07 percent average. Last year at this time, 15-year rates averaged 2.92 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 2.85 percent, with an average 0.4 point, falling from last week’s 2.90 percent average. A year ago, 5-year ARMs averaged 2.82 percent.

The opportunity to buy a home at low interest rates is still here. For how long, who knows?

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Housing Affordability Still High, For Now

DAILY REAL ESTATE NEWS | TUESDAY, FEBRUARY 02, 2016

Home prices may have been on the rise the last few years, but homes are still more affordable now than they were in the pre-bubble years, according to the latest Mortgage Monitor Report released by Black Knight Financial Services.

Households are using 21 percent of the national median income to pay a mortgage on a median-priced home. In 2000-2002, the average payment-to-income ratio was 26 percent, and in 2006, it was 33 percent.

However, Black Knight’s report warns that if home prices continue to increase – as they have year-over-year for 43 consecutive months – the affordability picture in home ownership could start to change in two years.

Black Knight factored in a continuing 5.5 percent annual home price appreciation as well as interest rate rises of 50 basis points a year. Under that scenario, “we see that in two years home affordability will be pushing the upper bounds of that pre-bubble average,” says Ben Graboske, senior vice president at Black Knight Data and Analytics. “At the state level under that same scenario, eight states would be less affordable than 2000-2002 levels within 12 months and 22 states would be within 24 months.”

Graboske notes that Hawaii and Washington, D.C., in particular, are already less affordable than they were during the pre-bubble era. On the other hand, he says, even after 24 months under this scenario, Michigan – and a few other states – would still be much more affordable by the end of 2017 than it was in the early 2000s.

Within 12 months, the average mortgage payment is expected to rise by $114, which would then require 24 percent of a household’s monthly income – still below the 2000-2002 levels, according to Black Knight. But by the end of 2017, monthly mortgage payments are expected to be $240 more than today, which would push the tally to 26.5 percent of a household’s income and the upper levels of the pre-bubble averages, the report notes.

If you’re on the fence and are thinking about buying a home in Phoenix, please call Laura B.

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6 Stellar Reasons to Buy a Home in 2016

Buying a Home In 2016

Six Stellar Reasons To Buy a Home In 2016

Is it really 2016 already?  For those of you who happen to be planning on buying a home in the new year—or even just trying to—there’s a whole lot to celebrate. Why? A variety of financial vectors have dovetailed to make this the perfect storm for home buyers to get out there and make an (winning) offer. Here are six home-buying reasons to be thankful while ringing in the new year:

Reason No. 1: Interest rates are still at record lows

Even though they may creep up at any moment, it’s nonetheless a fact that interest rates on home loans are at historic lows, with a 30-year fixed-rate home loan still hovering around 4%.

“Remember 18.5% in the ’80s?” asks Tom Postilio, a real estate broker with Douglas Elliman Real Estate and a star of HGTV’s “Selling New York.”“It is likely that we’ll never see interest rates this low again. So while prices are high in some markets, the savings in interest payments could easily amount to hundreds of thousands of dollars over the life of the mortgage.”

Reason No. 2: Rents have skyrocketed

Another reason home buyers are lucky is that rents are going up, up, up! (This, on the other hand, is a reason not to be thankful if you’re a renter.) In fact, rents outpaced home values in 20 of the 35 biggest housing markets in 2015. What’s more, according to the 2015 Rent.com Rental Market Report, 88% of property managers raised their rent in the past 12 months, and an 8% hike is predicted for 2016.

“In most metropolitan cities, monthly rent is comparable to that of a monthly mortgage payment, sometimes more,” says Heather Garriock, mortgage agent for The Mortgage Group. “Doesn’t it make more sense to put those monthly chunks of money into your own appreciating asset rather than handing it over to your landlord and saying goodbye to it forever?”

Reason No. 3: Home prices are stabilizing

For the first time in years, prices that have been climbing steadily upward are stabilizing, restoring a level playing field that helps buyers drive a harder bargain with sellers, even in heated markets.

“Local markets vary, but generally we are experiencing a cooling period,” says Postilio. “At this moment, buyers have the opportunity to capitalize on this.”

Reason No. 4: Down payments don’t need to break the bank

Probably the biggest obstacle that prevents renters from becoming homeowners is pulling together a down payment. But today, that chunk of change can be smaller, thanks to a variety of programs to help home buyers. For instance, the new Fannie Mae and Freddie Mac Home Possible Advantage Program allows for a 3% down payment for credit scores as low as 620.

Reason No. 5: Mortgage insurance is a deal, too

If you do decide to put less than 20% down on a home, you are then required to have mortgage insurance (basically in case you default). A workaround to handle this, however, is to take out a loan from the Federal Housing Administration—a government mortgage insurer that backs loans with down payments as low as 3.5% and credit scores as low as 580. The fees are way down from 1.35% to 0.85% of the mortgage balance, meaning your monthly mortgage total will be significantly lower if you fund it this way. In fact, the FHA predicts this 37% annual premium cut will bring 250,000 first-time buyers into the market. Why not be one of them?

Reason No. 6: You’ll reap major tax breaks

Tax laws continue to favor homeowners, so you’re not just buying a place to live—you’re getting a tax break! The biggest one is that unless your home loan is more than $1 million, you can deduct all the monthly interest you are paying on that loan. Homeowners may also deduct certain home-related expenses and home property taxes.

by Kimberly Dawn Neumann

Market Unrest Pushes Down Mortgage Rates

DAILY REAL ESTATE NEWS | FRIDAY, JANUARY 22, 2016

For the third consecutive week, mortgage rates edged down, with the 30-year fixed-rate mortgage continuing its run below 4 percent, Freddie Mac reports in its weekly mortgage market survey.

“The Freddie Mac mortgage rate survey had difficulty keeping up with market events this week,” says Sean Becketti, Freddie Mac’s chief economist. “The 30-year mortgage rate dropped 11 basis points to 3.81 percent, the lowest rate in three months. This drop reflected weak inflation and nonstop financial market turbulence that is driving investors to the safe haven of Treasuries. However, the survey was largely complete prior to Wednesday’s Treasury rally that drove the yield on the 10-year Treasury below 2 percent, down 29 basis points since the end of 2015.”

Freddie Mac reports the following national averages with mortgage rates for the week ending Jan. 21:

  • 30-year fixed-rate mortgages: averaged 3.81 percent, with an average 0.6 point, dropping from last week’s 3.92 percent average. Last year at this time, 30-year rates averaged 3.63 percent.
  • 15-year fixed-rate mortgages: averaged 3.10 percent, with an average 0.5 point, falling from last week’s 3.19 percent average. A year ago, 15-year rates averaged 2.93 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 2.91 percent, with an average 0.5 point, dropping from last week’s 3.01 percent average. Last year at this time, 5-year ARMs averaged 2.83 percent.

It’s a fantastic time to buy a home while interest rates are still at historic lows.

2016 Interest Rate Graph

Interest Rate Chart January 2016

Source: Freddie Mac

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